16092 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

9 CFR Part 201 

[Doc. No. AMS–FTPP–21–0045] 

RIN 0581–AE05 

Inclusive Competition and Market 

Integrity Under the Packers and 

Stockyards Act 

AGENCY: Agricultural Marketing Service, 

Department of Agriculture (USDA). 

ACTION: Final rule. 

SUMMARY: The U.S. Department of 

Agriculture’s (USDA or Department) 

Agricultural Marketing Service (AMS or 

the Agency) amends its Packers and 

Stockyards Act, 1921, regulations to 

prohibit undue prejudice and unjust 

discrimination against individuals on a 

prohibited basis unrelated to the quality 

of the service or product provided. The 

rule also identifies retaliatory practices 

that interfere with lawful 

communications, assertion of rights, and 

associated participation, among other 

protected activities, as unjust 

discrimination prohibited by the law. 

Finally, the rule identifies deceptive 

practices that violate the Packers and 

Stockyards Act with respect to contract 

formation, contract performance, 

contract termination, and contract 

refusal. The purpose of this rule is to 

promote inclusive competition and 

market integrity in the livestock, meats, 

poultry, and live poultry markets. 

DATES: This rule is effective May 6, 

2024. 

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; 

Telephone: (202) 690–4355; or email: 

s.brett.offutt@usda.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents 

I. Executive Summary

II. Background

A. Current Market Structure

B. Risks and Implications for Producers

C. Need for This Rulemaking

III. Authority

IV. Summary of the Proposed Rule

V. Changes From the Proposed Rule

A. Market Vulnerable Individual (MVI) to

Prohibited Bases

B. Prohibited Actions Taken on a

Prejudicial Basis

C. Exceptions to the Prohibited Bases

D. Retaliation Provisions

E. Technical Changes

VI. Provisions of the Final Rule

A. Definitions (§ 201.302)

B. Undue Prejudice and Unjust

Discrimination (§ 201.304(a))

C. Retaliation (§ 201.304(b))

D. Recordkeeping (§ 201.304(c))

E. Deceptive Practices (§ 201.306)

F. Severability (§ 201.390)

VII. Comment Analysis

A. Definitions (§ 201.302)

B. Applicability

C. Undue Prejudices and Unjust

Discrimination (§ 201.304(a))

D. Specific Actions Constituting Prejudice

or Disadvantage (§ 201.304(a)(2))

E. Retaliation (§ 201.304(b))

F. Recordkeeping (§ 201.304(c))

G. Deceptive Practices (§ 201.306)

H. Severability (§ 201.390)

I. Effective and Compliance Dates

J. Regulatory Notices & Analysis &

Executive Order Determinations

K. Comments on Legal Authority or Other

Legal Issues

L. Other Comments Related to the

Proposed Rule

VIII. Regulatory Analysis

A. Paperwork Reduction Act

B. Executive Orders 12866, 13563, and

14094; Regulatory Impact Analysis; and

the Regulatory Flexibility Act

C. Executive Order 13175—Consultation

and Coordination With Indian Tribal

Governments

D. Civil Rights Impact Statement

E. Executive Order 12988—Civil Justice

Reform

F. E-Government Act

G. Unfunded Mandates Reform Act

H. Congressional Review Act

I. Executive Summary

The rise of concentration and changes

in contracting practices in livestock and 

poultry markets over the last four 

decades have facilitated and exposed 

producers and growers (hereafter, 

producers unless otherwise noted) to 

increasing economic harms from 

exclusionary, prejudicial, or otherwise 

discriminatory conduct, as well as 

deceptive conduct, by packers, swine 

contractors, and live poultry dealers 

(hereinafter regulated entities, unless 

otherwise noted). The regulatory toolkit 

embodied in the Packers and Stockyards 

Act, 1921, as amended (P&S Act or the 

Act) (7 U.S.C. 181 et seq.), authorizes 

USDA to issue regulations to address 

these issues. This final rule seeks to 

address a discrete but important set of 

those wrongfully exclusionary or 

deceptive practices that undermine 

inclusive competition and market 

integrity: specifically, (1) discriminatory 

prejudices on certain bases relating to 

the producer’s characteristics, (2) 

retaliation for engaging in certain acts as 

part of being a livestock or poultry 

producer or grower, and (3) false or 

misleading statements or material 

omissions in certain contexts. These 

practices deny producers opportunities 

to compete in the marketplace and earn 

the full value of their livestock sales or 

poultry growout services. 

On October 3, 2022, AMS published 

in the Federal Register (87 FR 60010) a 

proposal to amend the regulations 

implementing the Act located in title 9, 

part 201, of the Code of Federal 

Regulations (CFR) by adding a new 

subpart O titled ‘‘Competition and 

Market Integrity.’’ AMS solicited 

comments on the proposed rule for an 

initial period of 60 days, and extended 

the comment period for an additional 45 

days on November 30, 2022 (87 FR 

73507). AMS received 446 comments 

from industry trade associations, nonprofit organizations, individuals, State 

attorneys general, farm bureaus, 

academic/research institutions, and 

other groups. After consideration of all 

comments, AMS is adopting the 

proposed rule, with modifications 

designed to increase specificity and, 

therefore, certainty and enforceability. 

AMS is issuing these regulations to 

enhance basic protections that modern 

livestock and poultry producers need to 

promote inclusive competition and 

market integrity. Specifically, this final 

rule will: 

• Prohibit, as undue prejudices or

disadvantages, actions that inhibit 

market access or actions that are 

otherwise adverse to covered producers 

on the basis of race, color, religion, 

national origin (including ethnicity), sex 

(including sexual orientation and 

gender identity, as well as pregnancy), 

disability, marital status, or age; or 

because of the covered producer’s status 

as a cooperative, with certain narrow 

exceptions such as the provision of 

religious meats and the functions of 

Tribal governments; 

• Prohibit, as unjust discrimination,

retaliatory and adverse actions that 

interfere with lawful communications, 

assertion of rights, associational 

participation, and other protected 

activities; 

• Prohibit, as deceptive practices,

regulated entities employing false or 

misleading statements or omissions of 

material information in contract 

formation, performance, and 

termination; and prohibit regulated 

entities from providing false or 

misleading representations regarding 

refusal to contract; and 

• Require recordkeeping to support

USDA monitoring, evaluation, and 

enforcement of compliance with aspects 

of this rule. 

AMS is adopting this final rule to 

promote inclusive competition and 

market integrity, as rational decisionmaking, so critical to economic success, 

can most effectively occur in a market 

free of the practices prohibited by this 


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Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 16093 

1Parties may report tips or complaints to 

farmerfairness.gov. Additional information is 

available at https://www.ams.usda.gov/services/ 

enforcement/psd/reporting-violations. 

2 7 U.S.C. 181, including sections 203–205, 404, 

and 308 of the Act. 

3Swift & Company, Armour and Company, The 

Cudahy Packing Company, Wilson & Co., Inc., and 

Morris & Company, Rosales, W.E., 2005. Dethroning 

economic kings: The Packers and Stockyards Act of 

1921 and its modern awakening. Journal of 

Agricultural & Food Industrial Organization, 3(2). 

Accessed at https://www.degruyter.com/document/ 

doi/10.2202/1542-0485.1118/html on 01–09–2024. 

See also, David Gordon, The Beef Trust: Antitrust 

Policy and the Meat Packing Industry, 1902–1922, 

at 230, 290 (1983) (Ph.D. Dissertation, Claremont 

Graduate School) (on file with the Wisconsin 

Historical Society Library) (referring to the ‘‘Big 

Five’’ and the ‘‘Beef Trust’’ interchangeably). 

https://www.proquest.com/openview/ 

b8fb565a39cdb1190b7b80e932cb8495/ 

1?cbl=18750&diss=y&pq-origsite=

gscholar&parentSessionId=XHRnq%2FulA9IQvIv3

F8HNW40SbD8BIeNZTdBAIYAD8bQ%3D. 

4Rosales, William E. ‘‘Dethroning Economic 

Kings: The Packers and Stockyards Act of 1921 and 

its Modern Awekening’’ Journal of Agricultural & 

Food Industrial Organization 3, no. 2, access Feb. 

1, 2024, (2005), https://doi.org/10.2202/1542- 

0485.1118. 

5Christopher Leonard, ‘‘The Meat Racket,’’ (2015) 

and Witt, Howard. ‘‘Hmong poultry farmers cry 

foul, sue’’ Chicago Tribune. May 15, 2006. 

Available online at: https://

www.chicagotribune.com/news/ct-xpm-2006-05-15- 

0605150155-story.html. 

6The Packers and Stockyards Act: An Overview, 

National Agricultural Law Center, access Feb. 1, 

2024, https://nationalaglawcenter.org/overview/ 

packers-and-stockyards/ 

7Bruhn’s Freezer Meats v. U.S. Dep’t of Agric., 

438 F.2d 1332, 1337 (8th Cir. 1971), cited in Van 

Wyk v. Bergland, 570 F.2d 701, 704 (8th Cir. 1978) 

in AGRICULTURE DECISIONS Volume 72 Book 

One Part Two (P & S) Pages 371–434, page 13, 

access Feb. 1, 2024, https://www.usda.gov/sites/ 

default/files/documents/Vol%2072%20Book

%201%20Part%202.pdf. 

rule. This final rule also affirms the 

importance of a clear and direct 

regulatory framework with respect to 

prohibited conduct, thus protecting 

producers in the marketplace. This rule 

does not address every possible way in 

which producers may be wrongfully 

excluded or deceived under the Act. 

Producers who believe their rights 

under the Act have been violated— 

whether specifically under this final 

rule, or in other circumstances—can 

report a violation to AMS.1 For some 

matters in poultry, USDA further refers 

the case to the U.S. Department of 

Justice (DOJ) for enforcement.2

Producers may also enforce the law and 

its regulations through private rights of 

action under the Act. Penalties under 

the Act depend upon the nature of the 

particular violation, including the 

particular animal species, and range 

from monetary penalties to injunctive 

relief. 

This final rule is effective 60 days 

after publication in the Federal 

Register. AMS has chosen this effective 

date because it believes that compliance 

with this final rule will not require 

significant administrative or financial 

obligations for regulated entities. The 

low cost, coupled with minimal process 

changes regulated entities will be 

required to make to comply, support an 

effective date 60 days after publication. 

Sixty days will provide adequate time 

for regulated entities to be informed of 

the specified conduct this final rule 

prohibits as well as make changes to 

comply with the final rule. 

II. Background 

A. Current Market Structure and Risks 

for Producers 

Market abuses of discrimination, 

retaliation, and deception can occur in 

livestock and poultry markets. Such 

conduct is amplified and exacerbated 

under increasingly concentrated 

livestock and poultry markets. Such 

markets are dominated by a few large 

packers and live poultry dealers. 

Additionally, changes in contracting 

practices, specifically bilateral 

contracting and vertical contracting that 

reaches farther into the production 

aspects of livestock and poultry, have 

given processors greater control over 

producers. These changes can 

exacerbate the impacts of 

discriminatory, retaliatory, and 

deceptive conduct by packers and live 

poultry dealers, which inhibits 

producers from fully participating in 

livestock and poultry markets or 

obtaining the full value of their 

livestock and poultry products and 

services. With few marketing options in 

concentrated markets, producers are 

more likely to suffer long lasting harm 

from market abuses by packers and live 

poultry dealers than would be the case 

in a marketplace that is more 

competitive. 

A review of the historical structure of 

livestock and poultry markets shows 

how the risk of worsened competitive 

conditions or materially adverse effects 

to producers at the hands of a few large 

processors (livestock packers and live 

poultry dealers) has grown over time. In 

the late 1800s to early 1900s, the ‘‘Big 

Five’’ 3 large meat packers dominated 

the livestock market by working 

cooperatively to jointly set prices and 

divide territories amongst themselves.4 5

In 1921, Congress enacted the Packers 

and Stockyards Act, 7 U.S.C. 181–229, 

to promote effective competition and 

integrity in livestock, meat, and poultry 

markets because it believed that the 

large packers employed anticompetitive 

or abusive practices that harmed 

producers and consumers.6 The 

objective of the P&S Act is ‘‘to assure 

fair trade practices in the livestock 

marketing . . . industry in order to 

safeguard farmers and ranchers against 

receiving less than the true market value 

of their livestock.’’ 7 After the enactment 

of the P&S Act, several decades of 

relatively more competitive conditions 

in the livestock markets prevailed; 

however, structural shifts in the 

industry defined by technological and 

productivity advances and mergers and 

acquisitions by meat processors led to 

fewer and larger meat processors— 

increased market concentration—in the 

latter half of the 20th century. This 

transformation led to much larger sized 

packing plants, multi-plant packers and 

live poultry dealers; raised barriers to 

entry; reduced the number of meat 

processor competitors; and reduced 

competition. Today, greater use of 

bilateral and vertical contracting in the 

livestock and poultry industries also 

gives regulated entities greater practical 

ability to cause these harms in ways that 

are hard for producers to avoid. 

The following table shows the level of 

concentration in the livestock and 

poultry slaughtering industries for 

1980–2020 using four-firm 

Concentration Ratios (CR4). 


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16094 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

The data are estimates of four-firm 

concentration ratios at the national 

level, but the relevant economic markets 

for livestock and poultry may be 

regional or local, where concentration 

may be higher than at the national level. 

The following figure shows the relative 

access that producers have to slaughter 

plants within various draw areas. 


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Table 1: Four-Firm Concentration Ratio in Livestock and Poultry Slaughter 

Steers & Hogs Broilers Turkeys Year Heifers 

(%) (%) (%) (%) 

1980 36 34 32 40 

1985 50 32 42 38 

1990 72 40 41 45 

1995 79 46 46 45 

2000 82 57 49 41 

2005 79 64 53 54 

2010 85 65 51 56 

2015 85 66 51 57 

2020 81 64 53 55 

Note: U.S. Department of Agriculture, AMS Packers and Stockyards annual reports. Available at 

https://www.ams.usda.gov/reports/psd-annual-reports. 
Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 16095 

8Meat, Poultry and Egg Product Inspection 

Directory by Establishment Name, by Number, and 

Demographic Data, USDA Food Safety Inspection 

Service, available at https://www.fsis.usda.gov/ 

inspection/establishments/meat-poultry-and-eggproduct-inspection-directory. Big Meat Acquisition 

Datasets, Yale Thurman Arnold Project, access Feb. 

1, 2024, (2021), https://som.yale.edu/centers/ 

thurman-arnold-project-at-yale/agriculture-andantitrust. Haines, Michael, Fishback, Price, and 

Rhode, Paul. United States Agriculture Data, 1840– 

2012, Inter-university Consortium for Political and 

Social Research [distributor], access Feb. 1, 2024, 

(2018), https://doi.org/10.3886/ICPSR35206.v4 

(County-level census data from 1978–2012). USDA 

Census of Agriculture Large Datasets, USDA 

National Agricultural Statistics Services, access at 

Feb. 1, 2024, https://www.nass.usda.gov/datasets/ 

(Livestock data from 1997–2017). Ward, C.E., 

Meatpacking plant capacity and utilization: 

Implications for competition and pricing, access at 

Feb. 1, 2024, (1990), https://doi.org/10.1002/1520- 

6297(199001)6:1%3C65::AID-AGR27

20060107%3E3.0.CO;2-V (Estimating travel 

distances for cattle to be around 100 miles). 

MacDonald, James M. & Ollinger, Michael & Nelson, 

Kenneth E. & Handy, Charles R., 2000, 

‘‘Consolidation In U.S. Meatpacking,’’ Agricultural 

Economic Reports 34021, United States Department 

of Agriculture, Economic Research Service, access 

at Feb. 1, 2024, (2020), https://www.ers.usda.gov/ 

Continued 


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Figure 1. Relative Producer Access to Slaughtering Plants, 2017 

BroUers: 2 or Fewer Plants - 50 ml. 

2,063 counties, Bk farms (46% head) 

Farms(#) I 50 I 100 

Hogs: 2 or Fewer Plants -- 115 mi. 

2,013 counties, 8k farms (13% head) 

Farms(#) I 10 I 20 I 30 I 40 

Steer and Helfer: 2 or Fewer Plants - 115 mi. 

2,821 counties, 410k farms (79% head) 

Farms (#) I 300 I 600 I 900 

Broilers: 3 or More Plants - 50 mi. 

188 counties, 8k farms (54% head) 

Farms (#) I 1 oo I 200 I 300 I 400 

Hogs: 3 or More Plants - 115 mi. 

736 counties, 15k farms (87% head) 

Farms (#) I 100 I 200 I 300 I 400 

Steer and Helfer: 3 or More Plants - 115 mi. 

227 counties, 38k farms (21 % head) 

Farms(#) I 500 I 1k I 2k 

Note: The figure shows the number of slaughter plants (2017): 2 or fewer (left) or 3 or more (right) within 

50 miles (broiler - top) and 115 miles (hog-middle, steer and heifer- bottom) for broiler, hog, and cattle 

farms. 8 
16096 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

webdocs/publications/41108/18011_aer785_1_

.pdf?v=0. Smith, Timothy L., Andrew L. Goodkind, 

Tae-Gon Kim, Rylie E. O. Pelton, Kyo Suh, and 

Jennifer Schmitt, (2017). ‘‘Subnational mobility and 

consumption-based environmental accounting of us 

corn in animal protein and ethanol supply chains’’, 

Proceedings of the National Academy of Sciences 

(38), 114, access at Feb. 1, 2024, https://doi.org/ 

10.1073/pnas.1703793114 (Estimating travel 

distances for broilers to be 48 miles on average; and 

for pigs and cattle, ∼115 miles). Beam, A.L. & 

Thilmany, Dawn & Pritchard, R.W. & Garber, L.P. 

& Metre, DC & Olea-Popelka, F.J.. (2015). Beam, 

A.L., D.D. Thilmany, R.W. Pritchard, L.P. Garber, 

DC Van Metre, and F.J. Olea-Popelka. ‘‘Distance to 

Slaughter, Markets and Feed Sources Used by 

Small-Scale Food Animal Operations in the United 

States.’’ Renewable Agriculture and Food Systems 

31, no. 1, access at Feb. 1, 2024, (2016): 49–59. 

https://doi.org/10.1017/S1742170514000441. 

(Estimating transportation distances of 90 miles for 

95 percent of percent of small-scale livestock 

operations). (Analysts filtered for plants that 

slaughtered beef, pork, and chicken. Analysts 

joined firm name appearing in directory to likely 

parent firm name by constructing a name lookup 

using merger data published by Yale Thurman 

Arnold Project; and manual internet search for 

poultry and livestock firms’ mergers and 

acquisitions. Analysts obtained geographic 

coordinates from establishment address. For each 

establishment per animal class, analysts calculated 

the distance from the centroids of all U.S. counties 

to all plant establishments; and filtered for 

distances within 50 miles (broiler) and 115 miles 

(hog, cattle), based on estimates of travel distances 

for each animal obtained from literature search. 

Analysts calculated number of counties reachable 

by the travel distance for each animal species, i.e.: 

geographic draw area for each plant. Analysts 

produced for each county the number of plants 

appended with the parent firm name derived from 

the historic merger dataset described above. 

Analysts present as the summary figure the total 

number of unique parent firm names located within 

90 (broilers) and 115 (hog, cattle) miles of county 

centroids that contain, for the purposes of this 

county-level analysis, the total number farm 

operations of each animal type in the county. 

Analysts summarized the number of counties, 

inventory, and operations with hog, broiler, and 

cattle sales, for all counties from 2017 NASS 

county-level dataset; and, for farm operations, 

filtered only for farm operations above the smallest 

class size, e.g.: for hog, above 25 head; for cattle, 

above 10 head; for broilers, above 2,000 head. This 

smallest class size is not likely to be utilizing the 

slaughter plants). 

9MacDonald, J.M. and Key, N., 2012, Market 

power in poultry production contracting? Evidence 

from a farm survey, Journal of Agricultural and 

Applied Economics, 44(4), pp.477–490, access at 

Feb. 1, 2024, (2012), https://www.proquest.com/ 

scholarly-journals/market-power-poultryproduction-contracting/docview/1183766436/se-2. 

10 Ibid. 

11The Herfindahl-Hirschman Index, HHI, is a 

‘‘commonly accepted measure of market 

concentration. The HHI is calculated by squaring 

the market share of each firm competing in the 

market and then summing the resulting numbers.’’ 

U.S. Department of Justice, ‘‘Herfindahl-Hirschman 

Index,’’ accessed Feb. 1, 2024, (2018), https:// 

www.justice.gov/atr/herfindahl-hirschman-index. 

12 Lauck, J. K. (1998). Competition in the Grain 

Belt Meatpacking Sector After World War. II. The 

annals of Iowa, 57(2), https://pubs.lib.uiowa.edu/ 

annals-of-iowa/article/id/10311/ (Finding that in 

1984, only 7 percent of livestock were marketed 

through terminal markets. By this time, many 

packers made vertical contracts with farmers or 

feedlots). ‘‘Structural Change in Livestock: Causes, 

Implications, Alternatives,’’ Research Institute on 

Livestock Pricing 232728, Virginia Polytechnic 

Institute and State University, Department of 

Agricultural and Applied Economics, access at Feb. 

1, 2024, (1990), available at https://ideas.repec.org/ 

p/ags/vtrilp/232728.html. See James M. MacDonald 

and Christopher Burns, ‘‘Marketing and Production 

Contracts Are Widely Used in U.S. Agriculture,’’ 

Economic Research Service, (July 2019), available at 

https://www.ers.usda.gov/amber-waves/2019/july/ 

marketing-and-production-contracts-are-widelyused-in-us-agriculture/ (For a producer to 

successfully bring an animal to processing, they 

must secure a source of animals to raise, feed, 

medicine, and processing services, among other 

needs. In contract production, regulated entities 

typically control the inputs and processing and 

distribution channels, and therefore can largely 

block market access for independent producers 

seeking to bypass these tightly controlled, vertically 

contracted supply chains). 

13USDA ERS, J. M. MacDonald and C. Burnes, 

(July 1, 2019), Marketing and Production Contracts 

Are Widely Use in U.S. Agriculture, Amber Waves. 

(In 2017, 49 percent of the value of livestock 

production was raised under contract agreements— 

usually between farmers and processors. Most 

poultry is produced under contract, and what is not 

produced under contracts between processors and 

growers is raised in facilities operated directly by 

processors. See graph for data on hogs.) https://

ers.usda.gov/amber-waves/2019/july/marketingand-production-contracts-are-widely-used-in-usagriculture/; See also, USDA Packers and 

Stockyards Division (PSD), (2020), Packers and 

Stockyards Division Annual Report 2020, access at 

Feb. 1, 2024, https://www.ams.usda.gov/sites/ 

default/files/media/PackersandStockyards

AnnualReport2020.pdf. 

Half of all broiler growers have two or 

fewer processors for which they can 

grow broilers.9 The following table is a 

modification of a table in MacDonald 

(2012),10 adding the market 

concentration measure, the HerfindahlHirshman Index (HHI) 11 indices to 

MacDonald’s calculations of the 

integrators, i.e., live poultry dealers who 

typically have vertically integrated 

production, in the broiler grower’s 

geographic region. The HHIs in the table 

assume equal market share for each 

integrator and, as such, are the 

minimum HHIs possible (at least with 2 

to 4 growers). They show that 88.4 

percent of growers are facing an 

integrator HHI of at least 2,500. The data 

suggest that most contract broiler 

growers in the U.S. are thus in markets 

where the live poultry dealers have the 

potential to exercise market power. 

By the late 20th century and early 

21st century, contracting practices were 

also changing. Bilateral and vertical 

contracting were becoming the 

increasingly dominant means to 

coordinate live animal supplies.12

Today, most poultry production and 

about 98 percent of hog production fall 

under production contracts, and roughly 

70 percent of cattle procurement falls 

under marketing contracts.13 Bilateral 

and vertical contracting have benefits 


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Table 2: Integrators in the Broiler Growers' Region and Associated Market Power Indices 

Minimum Production Can change to Integrators in HHiof Farms (broiler (lbs. of another grower's area integrators in operations) broilers integrator grower's area removed) 

Number HHI Percent of total Percent of 

farms 

1 10,000 21.7 24.5 7 

2 5,000 30.2 31.7 52 

3 3,333 20.4 19.7 62 

4 2,500 16.1 14.8 71 

>4 7.8 6.6 77 
Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 16097 

14 David I. Smith, (Spring 2019), 19th Century 

Development of Refrigeration in The American 

Meat Packing Industry, access at Feb. 1, 2024, 

https://scholarworks.harding.edu/cgi/viewcontent.

cgi?article=1118&context=tenor. (‘‘Development of 

refrigeration and transportation in Chicago led the 

city to become the meat packing center of the 

world,’’ p. 100 from Howard Copeland Hill, ‘‘The 

Development of Chicago as a Center of the Meat 

Packing Industry,’’ Mississippi Valley Historical 

Review 10, no. 3 (1923): 253). (And, ‘‘Refrigerator 

cars ‘‘enabled dressed beef to be slaughtered in 

Chicago and shipped to the East at a lower cost than 

livestock,’’ p. 103, from Mary Yeager Kujovich, 

‘‘The Refrigerator Car and the Growth of the 

American Dressed Beef Industry,’’ The Business 

History Review 44, no. 4 (1970): 460.); Warren, 

Wilson, (2009), Tied to the Great Packing Machine: 

The Midwest and Meatpacking, Bibliovault OAI 

Repository, the University of Chicago Press, access 

at Feb. 1, 2024, https://books.google.com/books?

hl=en&lr=&id=f-CAclXhhCYC&oi=fnd&pg=PR7&

dq=history+of+meat+packing&ots=oFnnxzABzR&

sig=gp3eackbDY2CzAdcz8Q67cg0pvQ#v=one

page&q=history%20of%20meat%20packing&

f=false (Wilson notes that in the late 19th century 

plants were starting to move closer to livestock; 

and, by the 1950s, the industry hit the end of its 

third phase (1920s to 1950s) of packers buying 

direct from feedlots/producers and the decline of 

terminal markets.). 15MacDonald, J.M., Ollinger, M., Nelson, K.E. 

and Handy, C.R., (2000), Consolidation in US 

meatpacking. Economic Research Service, U.S. 

Department of Agriculture. Agricultural Economic 

Report No. 785, access at Feb. 1, 2024, https://

www.ers.usda.gov/webdocs/publications/41108/ 

18011_aer785_1_.pdf?v=0#:∼:text=Consolidation%

20in%20slaughter%20features%20three,the

%20location%20of%20animal%20feeders. 

16Willard Williams, ‘‘Small Business Problems in 

the Marketing of Meat and Other Commodities (Part 

4, Changing Structure of Beef Packing Industry),’’ 

Hearings before the Subcommittee on SBA and 

SBIC Authority and General Small Business 

Problems of the Committee on Small Business, 

House, 96th Cong., 1st sess. (Washington, DC, 

1979), 3; ‘‘Structural Change in Livestock: Causes, 

Implications, Alternatives,’’ Research Institute on 

Livestock Pricing 232728, Virginia Polytechnic 

Institute and State University, Department of 

Agricultural and Applied Economics, access at Feb. 

1, 2024, (1990), available at https://ideas.repec.org/ 

p/ags/vtrilp/232728.html; Lauck, J. K., (1998), 

Competition in the Grain Belt Meatpacking Sector 

After World War. II. The annals of Iowa, 57(2), 

access at Feb. 1, 2024, available at https://

pubs.lib.uiowa.edu/annals-of-iowa/article/id/ 

10311/; Marion, Bruce W., ‘‘Restructuring of Meat 

Packing Industries: Implications for Farmers and 

Consumers,’’ Working Papers 204107, University of 

Wisconsin-Madison, Department of Agricultural 

and Applied Economics, Food System Research 

Group (1988), available at https://ideas.repec.org/p/ 

ags/uwfswp/204107.html; Aduddell, Robert M. & 

Cain, Louis P., ‘‘The Consent Decree in the 

Meatpacking Industry, 1920–1956,’’ Business 

History Review, Cambridge University Press, vol. 

55(3) 1981; Aduddell, Robert M., and Louis P. Cain. 

‘‘A Strange Sense of Deja Vu: The Packers and the 

Feds, 1915–82.’’ Business and Economic History 11 

(1982): 49–60. http://www.jstor.org/stable/23702755 

(Documenting the historic shift from terminal 

auctions, in which around 90 percent of livestock 

were marketed in the 1920s; to 75 percent in the 

1940s; to just 7 percent by 1984 (Lauck 1998; 

Aduddell 1981). In terminal auctions, market 

participants, including producers, new independent 

packers, and retailers enjoyed the benefits of 

transparent pricing and many possible marketing 

channels. The number of terminal auctions doubled 

every decade from 1935–1955 (Aduddell 1981). In 

the latter half of the 20th century, a new generation 

of large packers located closer to producers; and 

built new facilities to process larger numbers of 

animals which they purchased directly from 

increasingly larger feedlots (Williams 1978). 

Various researchers during the time period 

documented how direct purchases from these 

packers accounted for a larger share of the 

industry’s sales; and contributed to decreasing 

numbers of market transactions and bids in 

terminal markets. For example, for cattle, the 

number of single bid transactions for cattle 

increased by 64 percent from 1982 to 1987; and by 

38 percent for hogs (Purcell 1990). In turn, 

producers facing fewer buyers often reported lower 

prices paid (Marion 1988). 17Lauck, J.K., (1998), Competition in the Grain 

Belt Meatpacking Sector After World War. II. The 

annals of Iowa, 57(2), access Feb. 1, 2024, available 

at https://pubs.lib.uiowa.edu/annals-of-iowa/ 

article/id/10311/; Unknown (W. Purcell, editor), 

(1990), ‘‘Structural Change in Livestock: Causes, 

Implications, Alternatives,’’ https://ideas.repec.org/ 

p/ags/vtrilp/232728.html. Research Institute on 

Livestock Pricing Virginia Polytechnic Institute and 

State University, Department of Agricultural and 

Applied Economics, available at https://ideas.repec.

org/p/ags/vtrilp/232728.html; Dickes, L.A. and 

Dickes, A.L. (2002), ‘‘Oligopolists then and now: a 

study of the meatpacking industry,’’ In Allied 

Academies International Conference. Academy for 

Economics and Economic Education. Proceedings 

(Vol. 5, No. 1, p. 15). Jordan Whitney Enterprises, 

Inc. https://www.proquest.com/openview/ 

919b243381c017244c764591d3d50a90/1?pqorigsite=gscholar&cbl=38640. 

18Aduddell 1981, supra. 

19 7 U.S.C. 192(a) and (b). 

and disadvantages for both processors 

and producers. However, the exercise of 

market power through the contracting 

practices occurring in concentrated 

livestock and poultry markets have left 

producers susceptible to the conduct 

this rule aims to prohibit. 

One of the notable structural changes 

over the course of the 20th century was 

the improvement in refrigeration 

technology. Refrigeration enabled meat 

packers to move away from the from 

Great Lakes and the Upper Midwest, 

where they could source large quantities 

of ice and build facilities closer to the 

centers of livestock production.14

Slaughterhouse and fabrication plants, 

therefore, could and did move away 

from urban areas to remote rural 

locations. As technology and the ability 

to scale operations also grew in the 

latter half of the 20th century, plants 

also grew in size.15

These changes had two implications 

over time. First, as processing plants 

moved from urban to rural areas, 

producers were more vulnerable to an 

exercise of monopsony power because 

the local and regional markets became 

more concentrated.16 Second, instead of 

terminal (auction) stockyards 

aggregating livestock for sales to 

packers, packers and producers 

increasingly entered into bilateral 

contractual relationships to buy 

livestock.17 When producers utilized 

stockyards for their livestock sales, they 

could rely for protection on the 

provisions of title III under the Act, 

which established robust 

nondiscrimination protections for 

producers (in sec. 312), as well as a DOJ 

Consent Decree in 1920 with the major 

packers, which established that the 

stockyards had to be structurally 

separate from packers.18 For example, in 

1968 USDA issued a Statement of 

General Policy under the Packers and 

Stockyards Act to clarify that the 

prohibitions against unjust 

discrimination under sec. 312 governing 

‘‘just and reasonable stockyard services’’ 

prohibited discrimination on the basis 

of race, religion, color, or national 

origin. However, as the industry 

structure evolved and livestock were 

increasingly sold through bilateral, 

vertical contracts, producers were no 

longer protected by sec. 312 of the Act. 

Instead, the sales were governed by title 

II of the Act, under which sec. 202(a) 

and (b) prohibits unjust discrimination 

and undue prejudice.19 This final rule 

seeks to articulate the necessary 

protections around unjust 

discrimination and deception under 

those provisions of the Act. 

The broiler industry also grew quickly 

after the Second World War. Early on it 

adopted a production model in which 

live poultry dealers contracted with 

poultry growers to grow-out broilers, 

rather than a model of independent 

producers selling broilers on the open 

market. With most broiler growing 

contracts, the live poultry dealer 

provides the chicks, the feed, and 

veterinary services, while the grower 

provides labor, facilities, equipment, 

and energy necessary to turn the chicks 

into slaughter-ready birds. At first, live 

poultry dealers were often feed 

suppliers, but now most processors act 

as live poultry dealers. Overall, the 

reality is that live poultry dealers have 

extensive control over production 

through the contracting practices. 

Furthermore, it is important to 

acknowledge the impact of a 

consolidating farm production 

landscape overall. With the livestock 

and poultry farming sectors 

consolidating over the last several 

decades, the aggregate number of 

producers has declined significantly, 

even as total production is stable or 

growing. Many factors driving the loss 

of producers in the marketplace are the 

same factors underlying the market 

changes referenced above and include 

productivity growth wrought by 

scientific and technological advances, 

economies of scale, and transportation 

improvements. As shown in Figures 2 

and 3 below, over the last 60 years, 

changes in animal production have 

corresponded to declines on the order of 


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16098 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

20Haines, Michael, Fishback, Price, and Rhode, 

Paul. United States Agriculture Data, 1840–2012, 

Inter-university Consortium for Political and Social 

Research [distributor], (2018), https://doi.org/ 

10.3886/ICPSR35206.v4 (County-level census data 

from 1978–2012). USDA Census of Agriculture 

Large Datasets, USDA National Agricultural 

Statistics Services, available at https://www.nass.

usda.gov/datasets/ (Livestock data from 1997– 

2017). 

21USDA Census of Agriculture Historical 

Archive, USDA National Agricultural Statistics 

Services, available at https://agcensus.library.

cornell.edu/ (National-level statistics from 1978– 

2012); USDA Census of Agriculture 2017, USDA 

National Agricultural Statistics Services, available 

at https://www.nass.usda.gov/Publications/ 

AgCensus/2017/Full_Report/Volume_1,_Chapter_1_

US/ (National-level statistics for 2017) (Analysts 

obtained the total number of operations with sales 

for each animal size class from historic nationallevel statistics from 1978–2017. Analysts summed 

the number of operations of every class other than 

the largest size class for each animal species, 

compared to the largest size class; and excluded the 

very smallest size class in each summary because 

the smallest size is not likely to receive slaughter 

services by regulated entities). 

hundreds of thousands of producers in 

nearly every size class except the 

largest, which increased by only 

hundreds of producers.20


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Figure 2: Declines in Number of Small to Large Poultry and Livestock Operations 

While Numbers of the Largest Size Increased 

Note: The number of producers annually producing 2,000 to 499,999 boilers (top), 10 to 2,499 head of 

cattle (second row), 25 to 4,999 head of hogs (third row), and 2,000 to 99,999 head of turkeys (bottom row) 

in the U.S. decreased by thousands to hundreds of thousands ofoperations from 1978 to 2017 (left); while 

the number of operations of the largest size class (right) increased on a smaller order or remained 

stagnant.21 
Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 16099 

In the figure above, the intensity of 

shading indicates the magnitude of 

decrease (left) or increase (right), with 

shading intensity scaled individually to 

each map panel. Generally, the number 

of cattle and hog operations for every 

size class except the largest decreased in 

many counties across the U.S., while the 

number of operations for the largest size 

class increased in only a few counties. 

Owing to the limitations of available 

county-level data, the above map for 

cattle operations include both feedlot 

and cow-calf operations, of which only 

the first sell directly to packers in most 

instances. Feedlots and packers tended 

to locate closer to producers in the latter 

half of the 20th century. As feedlots 

became larger and more concentrated, 

the number of farms with fed cattle sales 

declined. For example, McBride found 

that from 1978–1992, as the distribution 

of cattle feedlots became geographically 

tighter, the number of counties 

contributing to half of cattle sales 

decreased from 73 counties in 1978 to 

just 44 counties in 1992, with a fourth 


ddrumheller on DSK120RN23PROD with RULES2ER06MR24.004</GPH>

Figure 3: Change in Number of Farm Operations: 1978-2017 

Decrease in Number of Broiler Farms (2000 to 500k head) Increase in Number of Broiler Farms (500k or more head 

I -600 I -400 I -200 I 25 I 50 I 75 I 100 I 125 

Decrease in Number of Cattle Farms (10 to 499 head) Increase in Number of Cattle Farms (500 or more head) 

I -1000 I -500 150 I 100 I 150 

Decrease in Number of Hog Farms (25 to 999 head) Increase in Number of Hog Farms (1k or more head) 

I -900 I -600 I -300 I 50 1100 I 150 I 200 

Note: Decreases (left) in the number offarm operations from 2,000 to 500,000 broiler head produced 

annually (top), 10 to 499 cattle head (middle), and 25 to 999 hog head (bottom) coincided with increases in 

the number of the largest size class (right) for each animal operation from 1978 - 2017. 
16100 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

22MacDonald, J.M., Dong, X., & Fuglie, K. (2023), 

Concentration and competition in U.S. agribusiness 

(Report No. EIB–256), U.S. Department of 

Agriculture, Economic Research Service, available 

at https://doi.org/10.32747/2023.8054022.ers. 

McBride, William D. (1997). ‘‘Change in U.S. 

Livestock Production, 1969–92,’’ Agricultural 

Economic Reports 262047, United States 

Department of Agriculture, Economic Research 

Service, available at https://www.ers.usda.gov/ 

webdocs/publications/40794/32767_aer754fm.

pdf?v=1657.7. ‘‘Final Estimates for 1970–1975,’’ 

USDA (1978), available at https://downloads.

usda.library.cornell.edu/usda-esmis/files/ 

sq87bt648/7w62fc32q/qf85nf445/cattleest_Cattle_-_

Final_Estimates__1970-75.pdf. 

23C. Robert Taylor, ‘‘The Many Faces of 

Corporate Power in the Food System.’’ Presented at 

DOJ/FTC Workshop on Merger Enforcement, 

February 2004, available at https://www.justice.gov/ 

sites/default/files/atr/legacy/2007/08/30/ 

202608.pdf. 

24See, e.g., Jon Lauck, ‘‘Toward an Agrarian 

Antitrust: A New Direction for Agricultural Law,’’ 

75 N. D. L. Rev. 449 (1999); Peter C. Carstensen, 

‘‘Buyer Power and the Horizontal Merger 

Guidelines,’’ 14 U. Penn. J. Bus. L. 775 (2012); 

Peter. C. Carstensen, ‘‘Buyer Power, competition 

policy, and antitrust: the competitive effect of 

discrimination among suppliers,’’ The Antitrust 

Bulletin: Vol. 53, No. 2/Summer 2008; Kenneth E. 

Boulding, ‘‘Towards a Pure Theory of Threat 

Systems,’’ The American Economic Review, May, 

1963, Vol. 53, No. 2, 424–434. 

25https://www.usda.gov/media/press-releases/ 

2023/04/19/usda-announces-funding-availabilityexpand-meat-and-poultry. 

26Stafford v. Wallace, 258 U.S. 495 (1922). 

Bruhn’s Freezer Meats of Chicago, Inc. v. U. S. Dep’t 

of Agric., 438 F.2d 1332, 1337–38 (8th Cir. 1971) 

(quoting H.R. Rep. No. 1048, 85th Cong., 1st Sess. 

(1957), U.S. Code Cong. & Admin. News 1958, p. 

5213). Public Law 99–198, 99 Stat. 1535, 7 U.S.C. 

1631 (Section 1324 of the Food Security Act). Fed. 

Trade Comm’n, Report of the Fed. Trade Comm’n 

on the Meat-Packing Industry, Part I (Extent and 

Growth of Power of the Five Packers in Meat and 

Other Industries); Fed. Trade Comm’n, Report of the 

Fed. Trade Comm’n on the Meat-Packing Industry, 

Part II (Evidence of Combination among Packers); 

Fed. Trade Comm’n, Report of the Fed. Trade 

Comm’n on the Meat-Packing Industry, Part III 

(Methods of the Five Packers in Controlling the 

Meat-Packing Industry) (1919) (Finding that the 

purpose of the combination of Big Five packers was 

to ‘‘monopolize and divide among the several 

interests the distribution of the food supply not 

only of the United States but of all countries which 

produce a food surplus, and, as a result of this 

monopolistic position, to extort excessive profits 

from the people not only of the United States but 

a large part of the world’’). 

27Herbert Hovenkamp, ‘‘Does the Packers and 

Stockyards Act Require Antitrust Harm?’’ (2011). 

Faculty Scholarship at Penn Carey Law. 1862. 

https://scholarship.law.upenn.edu/faculty_

scholarship/1862 (‘‘subsections (a) and (b) appear to 

be tort-like provisions that are concerned with 

unfair practices and discrimination, but not with 

restraint of trade or monopoly as such’’); Peter 

Carstensen, The Packers and Stockyards Act: A 

History of Failure to Date, CPI Antitrust Journal 2– 

7 (April 2010) (‘‘Congress sought to ensure that the 

practices of buyers and sellers in livestock (and 

later poultry) markets were fair, reasonable, and 

transparent. This goal can best be described as 

market facilitating regulation.’’); Michael C. Stumo 

& Douglas J. O’Brien, ‘‘Antitrust Unfairness vs. 

Equitable Unfairness in Farmer/Meat Packer 

Relationships,’’ 8 Drake J. Agric. L. 91 (2003); 

Michael Kades, ‘‘Protecting livestock producers and 

chicken growers,’’ Washington Center for Equitable 

Growth (May 2022), https://equitablegrowth.org/ 

wp-content/uploads/2022/05/050522-packersstockyards-report.pdf (‘‘Section 202’s prohibitions 

on unjust discrimination and undue preference are 

not limited to conduct that destroys or limits 

competition or creates a monopoly. These 

provisions address conduct that impedes a wellfunctioning market and deprives livestock and 

poultry producers of the true value of their animals. 

Taken together, these provisions seek to prevent 

market abuses.’’). 

28See Bowman v. U.S. Dep’t of Agric., 363 F.2d 

81 at 85 (5th Cir. 1966). 

of sales coming from 13 counties. The 

number of feedlots declined from 

approximately 175,155 in 23 states in 

1970 to 27,000 feedlots in 2020, with 

half of all fed cattle from just 132 of 

them.22

Data from Figure 3 clearly indicate a 

shift in livestock and poultry raising to 

larger farms. This shift has occurred in 

concert with an increase in bilateral and 

vertical contracting. Bilateral and 

vertical contracting facilitate the 

conditions in which discrimination and 

retaliation are more likely to restrict 

market opportunities of producers and 

cause them to earn less than the full 

value of their animals. It is harder to 

discriminate in the aggregated market of 

the stockyard than through bilateral 

contracting regimes. When producers 

are locked into long-term agreements 

with a single buyer, it is easier for 

buyers to discriminate on prohibited 

bases or retaliate in response to 

protected activities because they 

exercise considerably more leverage 

over producers. Buyer-seller 

relationships are more fixed, providing 

much less flexibility for producers. 

Furthermore, with the number of farms 

declining in number, the economic 

harms of discrimination and retaliation 

are more likely to be permanent as being 

denied a long-term contract may lead to 

permanent exclusion from the market. 

Smaller farms in particular may be more 

likely to be permanent casualties of 

discriminatory or retaliatory behavior in 

a consolidated farm context as buyers 

gravitate toward larger suppliers to more 

easily satisfy their volume requirements. 

Discriminatory or retaliatory behavior is 

more likely to harm producers 

economically because it is much harder 

to find alternative buyers in a world 

with fewer, bigger farms and fewer, 

bigger packers and live poultry dealers. 

This rule is not directly addressing 

consolidation at the farm level or 

concentration at the processor level, but 

in providing more protections to 

producers from discriminatory and 

retaliatory conduct, it is helping to 

prevent market exclusion. 

A long-time scholar of these markets 

stated as early 2004 that the livestock 

and poultry markets appear to be by 

‘‘invitation only.’’ 23 That statement 

underscores the power of incumbent 

entities to control access to the market 

and, in many ways, the destiny of what 

had been multigenerational successful 

operations of producers and smaller 

competitors.24 This final rule addresses 

some of the ways that livestock and 

poultry markets unfairly exclude 

producers or otherwise limit their 

ability to obtain the full value of their 

animals. This final rule does not address 

all the factors contributing to market 

exclusion. However, it does address 

several practices that exclude producers 

and, in doing so, violate the Packers and 

Stockyards Act. AMS recognizes that 

creating inclusive and competitive 

markets with integrity requires multiple 

legal, regulatory, and programmatic 

strategies to mitigate the potential 

harmful effects of concentration and 

vertical contracting; build up 

alternatives through investments in 

regional meat and poultry processing; 25

and protect the rights of producers to 

develop producer organizations that 

advance farmer welfare, rural 

prosperity, and quality food. Thus, this 

rulemaking is one key piece to AMS’s 

strong commitment to mitigating the 

factors that restrict market access for 

livestock and poultry producers. 

B. Discrimination, Retaliation, and 

Deception 

The P&S Act is a remedial statute 

enacted to address problems faced by 

farmers, producers, and other 

participants in the markets for livestock, 

meats, meat food products, livestock 

products in unmanufactured form, 

poultry, and live poultry; to protect the 

public from predatory practices; and to 

protect freedom for farmers and 

businesses to engage in the flow of 

commerce.26 Thus, as academics and 

courts have noted, the Act has ‘‘tort-like 

provisions that are concerned with 

unfair practices and discrimination’’ 

that fulfill a ‘‘market facilitating 

function,’’ which Congress designed to 

prevent ‘‘market abuse.’’ 27 AMS 

interprets and implements the Act to 

achieve its core statutory purposes.28

AMS finds that current regulations 

under the Act do not sufficiently 

address the many unduly prejudicial, 

unjustly discriminatory, and deceptive 

practices in the livestock and poultry 

industry. As discussed above, the 

combination of increased concentration 

and use of vertical contracts in livestock 

and poultry markets enhances regulated 

entities’ ability to unjustly discriminate 

against or deceive market participants 

and effect significant harm upon 


ddrumheller on DSK120RN23PROD with RULES2
Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 16101 

29Stiglitz, J. ‘‘Approaches to the Economics of 

Discrimination,’’ American Economic Review, vol. 

63/2, May 1973: 287–295 (Discussing how 

discrimination in markets produces an economic 

inefficiency: ‘‘If all firms are profit maximizers, 

then all will demand the services of the low-wage 

individual, bidding their wages up until the wage 

differential is eliminated. Why does this not 

occur?’’). 

30 Ibid. 

31U.S. Department of Justice & U.S. Department 

of Agriculture, Public Workshops Exploring 

Competition in Agriculture, Livestock Industry 

Agenda, August 27, 2010, Fort Collins, Colorado, 

available at https://www.justice.gov/media/ 

1244701/dl?inline; https://youtu.be/Ygerhjjp0Is?

si=2L7OQh0I87fc1n1I&t=1885 (Producers described 

how packers could ‘‘pick . . . large entities’’ as part 

of marketing agreements to procure supply. In turn, 

this drove up an excess supply and drove down 

prices for producers or suppliers who did not 

receive such an agreement in the cash-negotiated 

market. One producer said that this discrimination 

had the effect of ‘‘controlling . . . inventory;’’ 

another said that this conduct had the effect of 

‘‘tens of thousands of independent producers being 

purged out of the business or going into bankruptcy 

. . . exited out of agriculture’’). 

32U.S. Department of Justice & U.S. Department 

of Agriculture, Public Workshops Exploring 

Competition in Agriculture, Livestock Industry 

Agenda, August 27, 2010, Fort Collins, Colorado, 

available at https://www.justice.gov/media/ 

1244701/dl?inline; https://youtu.be/Ygerhjjp0Is?

si=2L7OQh0I87fc1n1I&t=1885 (Producers described 

how packers could ‘‘pick . . . large entities’’ as part 

of marketing agreements to procure supply. In turn, 

this drove up an excess supply and drove down 

prices for producers or suppliers who did not 

receive such an agreement in the cash-negotiated 

market. One producer said that this discrimination 

had the effect of ‘‘controlling . . . inventory’’; 

another said that this conduct had the effect of 

‘‘tens of thousands of independent producers being 

purged out of the business or going into bankruptcy 

. . . exited out of agriculture’’). 

33 Government Accountability Project, Comments 

on Proposed Rule: Inclusive Competition and 

Market Integrity, (AugJan. 20232), available at 

https://www.regulations.gov/comment/AMS-FTPP21-0045-0427 (‘‘Many of these Vietnamese growers 

were enticed to sell profitable businesses and 

family homes and take out huge loans to enter 

broiler production contracts. Bearing all the same 

burdens of other broiler producers, they were 

further victimized by language barriers, cultural 

differences, and blatant mockery and exploitative 

behavior. In some cases, to keep their contracts, 

Vietnamese growers were asked to do additional 

work that was not required of white counterparts. 

Many of the Vietnamese farmers we have spoken to 

have likened the abusive and threatening behavior 

of their integrators to the communist government 

from which they fled’’). 

Rural Advancement Foundation International— 

USA, Comments on Proposed Rule: Inclusive 

Competition and Market Integrity, (AugJan. 20232), 

available at https://www.regulations.gov/comment/ 

AMS-FTPP-21-0045-0437 (‘‘They don’t have to cut 

you off, they can just bleed you dry. The barn we’re 

sitting in here hatched flocks with salmonella 

issues. They can send those compromised flocks to 

growers they want to bleed.’’ ‘‘My main concern is 

that [my integrator] operates on fear and threatening 

tactics to make every grower they have scared they 

are going to lose their contract every single day. No 

human being should have to live every single day 

in fear that their livelihood and only source of 

income can be taken away from them. I am sick of 

it, someone needs to do something to help us! I love 

to grow chickens and feed the world, but I do not 

like to live as if under a dictatorship.’’ ‘‘When I 

filed a complaint with the Packers and Stockyards 

Division about a weight issue, in which I was 

proven right, I was punished with bad tournament 

grouping for a year. Also, I have been told by my 

integrator, after receiving a really bad flock of birds, 

that they would be sure to not let it happen next 

time—so they know how to make it happen!’’). 34Food & Water Watch, ‘‘Comment on AMS– 

FTPP–21–0045: Inclusive Competition and Market 

Integrity Under the Packers and Stockyards Act,’’ 

(Jan. 2023), available at https://www.regulations.

gov/comment/AMS-FTPP-21-0045-0423. 35Rocky Mountain Farmers Union, ‘‘RMFU 

Comment for the Proposed Rule Inclusive 

Competition and Market Integrity Under the 

Packers and Stockyards Act’’ (Jan. 2023), available 

at https://www.regulations.gov/comment/AMSFTPP-21-0045-0441. 

producers. With bilateral contracts 

where one side has significant market 

power, regulated entities can target 

specific individuals, whether because of 

their personal characteristics (prejudice) 

or because of they have engaged in 

certain activities (retaliation). With 

market concentration, producers have 

limited options in the marketplace with 

which to avoid the harms. Vertical 

contracts where regulated entities have 

greater control over producers’ 

operations also enable certain forms of 

discrimination, such as in the provision 

of inputs, as live poultry dealers 

particularly have heightened control 

and involvement in the growers’ poultry 

operations. The provision of accurate 

and not misleading information also 

takes on heightened importance in these 

markets. In markets where producers are 

exiting, it is especially difficult for 

producers to reenter after being 

excluded, and the harms from exclusion 

are significant. 

i. Discrimination and Prejudice 

Discrimination and prejudice harm 

market participants and overall market 

integrity and efficiency. Discrimination 

is economically inefficient.29 The 

prejudicing entity that pays a producer 

below market value for his or her cattle 

or hogs because the producer belongs to 

a protected class causes that producer to 

not receive the full economic value of 

his or her animals; this discrimination 

also prevents the market from reaching 

an optimal allocation of wages and 

labor, contributing to a deadweight loss 

for the economy at large.30 Likewise, a 

regulated entity’s refusal to buy from a 

producer of a protected class offering 

animals of comparable quality to those 

being sold by other producers to that 

same buyer in the same time-frame may 

cause that disfavored producer to exit 

the market.31 If an entity refuses to 

purchase product from a producer of a 

particular class who offers identical 

product, such as cattle, that disfavored 

producer may face a lower price, 

resulting in a loss to the producer that 

may discourage the producer from 

continuing to operate or would-be 

producers of that class from entering the 

market.32 Using non-economic 

characteristics of the livestock or 

poultry producers to dictate patterns of 

production thwarts efforts by producers 

to accurately assess market conditions 

and make sound business decisions. 

In comments to the proposed rule, 

multiple organizations spoke of the 

widespread economic harms resulting 

from discrimination and prejudice in 

livestock and poultry markets.33 A 

producer advocacy organization 

reported that ‘‘discrimination, 

retaliation, and deception have become 

common features of livestock and 

poultry markets, leading to widespread 

fear and anxiety among producers.’’ 34

Another commenter wrote, ‘‘The current 

ability to exclude marginal competitors 

and exploit covered producers, rather 

than producing meaningful price 

discovery and transparency in the 

production and sales of livestock, meat 

and poultry, has greatly injured not only 

those involved in production but has 

restricted consumers from accessing 

reliable, affordable sources of 

protein.’’ 35 We acknowledge that these 

comments addressed what commenters 

viewed as a range of discrimination that 

could be covered by the proposed rule, 

and some that we are not addressing in 

this rule. Comments relating to these 

topics are discussed further in Section 

V—Changes from the Proposed Rule, 

and in Section VII—Comment Analysis. 

As previously noted, this rule does 

not address every form of 

discrimination or prejudicial exclusion 

or disadvantage in the marketplace but 

focuses on providing clarity regarding 

certain specific discriminatory and 

prejudicial practices that AMS has 

identified in this final rule as essentially 

unjust, which offer no benefits to the 

competitive market or producers, and 

which undermine competition on the 

merits of the products and services that 

producers offer. Additionally, although 

the descriptive analyses set forth below 

do not address the prevalence or degree 

or prejudice for each and every 

prohibited basis, owing to the 

limitations of available data, AMS 

believes that leaving out any of the 

bases listed in this rule would be 

inappropriate. Not only would that be 

inconsistent with the Department’s 

approach toward discrimination in 

other contexts, as repeatedly endorsed 

by Congress, but the resulting 

uncertainty could also open the door to 

those forms of discrimination in 

livestock, poultry, and related markets 

under the Act, which would be contrary 

to the purposes of this regulation and 


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16102 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

36McKinsey & Company. November 10, 2021. 

Black Farmers in the U.S: The Opportunity for 

Addressing Racial Disparities in Farming. Accessed 

at Black farmers in the US: The opportunity for 

addressing racial disparities in farming | McKinsey 

on 10/04/2023; and https:/www.archives./gov/ 

milestone-documents/morrill-act https://

www.archives.gov/milestone-documents/morrill-act 

(see, e.g., ‘‘People of color were often excluded from 

these educational opportunities due to their race.’’). 

37Francis, Dania V., Darrick Hamilton, Thomas 

W. Mitchell, Nathan A. Rosenberg, and Bryce 

Wilson Stucki. ‘‘Black Land Loss: 1920–1997.’’ In 

AEA Papers and Proceedings, vol. 112, pp. 38–42. 

American Economic Association, 2022. 

38U.S. Department of Agriculture, National 

Agricultural Library, ‘‘Heirs’ Property,’’ https://

www.nal.usda.gov/farms-and-agriculturalproduction-systems/heirs-property (last accessed 

Aug. 2022). 

39Mitchell, Thomas W. 2019. Historic Partition 

Law Reform: A Game Changer for Heirs’ Property 

Owners. In Heirs’ property and land fractionation: 

fostering stable ownership to prevent land loss and 

abandonment. https://www.fs.usda.gov/treesearch/ 

pubs/58543 (last accessed 8/9/2022). 

40U.S. Commission on Civil Rights. 1965. Equal 

Opportunity in Farm Programs: An Appraisal of 

Services Rendered by Agencies of the U.S. 

Department of Agriculture. https://files.eric.ed.gov/ 

fulltext/ED068206.pdf US Commission on Civil 

Rights. 1982. ‘‘The Decline of Black Farming in 

America.’’ https://eric.ed.gov/?id=ED222604. 

41Feder, J. and T. Cowan. 2013. ‘‘Garcia v. 

Vilsack: A Policy and Legal Analysis of a USDA 

Discrimination Case,’’ Congressional Research 

Service report number 7–5700, February 22, 2013. 

42Tang, Anthony M. ‘‘Economic development 

and changing consequences of race discrimination 

in Southern agriculture.’’ Journal of Farm 

Economics 41, no. 5 (1959): 1113–1126. 

43Casey, Alyssa R. Racial Equity in U.S. Farming: 

Background in Brief 2021. Congressional Research 

Service. https://crsreports.congress.gov/product/ 

pdf/R/R46969 (Finding that the percent of 

American Indian and Hispanic producers increased 

by 1.3 and 2.4 percent between the early 1900s to 

2017, compared to White producers which 

increased by 9 percent). 

44Horst, M., Marion, A. ‘‘Racial, ethnic and 

gender inequities in farmland ownership and 

farming in the U.S.’’ Agric Hum Values 36, 1–16 

(2019), available at https://doi.org/10.1007/s10460- 

018-9883-3. 

45Christopher Leonard, ‘‘The Meat Racket,’’ 

(2015) and Witt, Howard. ‘‘Hmong poultry farmers 

cry foul, sue’’ Chicago Tribune. May 15, 2006. 

Available online at: https://www.chicagotribune.

com/news/ct-xpm-2006-05-15-0605150155- 

story.html. 

46Most production contracts are held by poultry 

growers and less so by packers. A production 

contract, according to USDA NASS, ‘‘is an 

agreement between a producer or grower and a 

contractor (integrator) setting terms, conditions, and 

fees to be paid by the contractor to the operation 

for the production of crops, livestock, or poultry.’’ 

In contrast, many packers hold marketing contracts 

which, according to NASS, are ‘‘based strictly on 

price.’’ USDA NASS, No Date. ‘‘Appendix B. 

General Explanation and Census of Agriculture 

Report Form.’’ usappxb.pdf (usda.gov), accessed 8/ 

12/23. 

47See, generally, Congressional Research Service, 

‘‘Racial Equity in Farming,’’ Nov. 2021, available at 

https://crsreports.congress.gov/product/pdf/R/ 

R46969; Economic Research Service, USDA, 

‘‘Access to Farmland by Beginning and Socially 

Disadvantaged Farmers: Issues and Opportunities,’’ 

Dec. 2022, available at https://www.ers.usda.gov/ 

publications/pub-details/?pubid=105395. 

the Act, which prohibits ‘‘undue 

prejudice . . . in any respect.’’ 

a. Discrimination and Prejudice on

Personal Characteristics and Status

AMS (including its predecessor 

agencies) has received complaints over 

the years of discrimination against 

producers, in particular in the poultry 

industry, and especially on the basis of 

race. The Agency has not always been 

able to act on these complaints for a 

variety of reasons. The Agency also 

believes that some complaints may have 

been suppressed due to the risks of 

retaliation, which are discussed below. 

As highlighted below, comments to this 

rulemaking affirmed the prevalence and 

remaining challenge of discrimination 

on prohibited bases. 

Researchers have documented the 

history of discrimination against racial 

and ethnic minorities in agricultural 

markets. Multiple factors have 

contributed to the decline of non-whiteowned farms, specifically to the decline 

of Black-owned farms, including the 

Homestead Act of 1862, the Morrill 

Land Grant Act of 1862, lack of legal 

protections for heirs’ property, and 

limited access to capital through 

discriminatory lending practices.36 For 

example, in the earlier part of the 20th 

century, the Federal government and 

agricultural landholders restricted land 

sales, engaged in predatory and 

fraudulent lending practices, and 

denied farm support programs to Black 

farmers and ranchers,37 which has 

resulted in the loss of Black economic 

security and land loss.38 39 40 41 A 1959 

paper reported ‘‘significant market 

discrimination’’ against Black American 

producers in the Southern United 

States.42 Discrimination by the Federal 

government and private sector also 

caused Hispanic people and American 

Indian people farming on reservations to 

lose farmland and decline in 

number.43 44 More recently, some news 

reports have documented that 

companies may present contract terms 

to non-native English speaking 

immigrant communities who may not 

understand them, and have spotlighted 

the treatment of Asian American and 

Pacific Islander poultry growers in 

particular.45

Researchers have also documented 

some of the adverse outcomes, 

including economic outcomes, caused 

by discrimination. In the livestock 

sector, the results of historical prejudice 

and the risk of present-day prejudice are 

apparent when looking at data from the 

2017 Census of Agriculture, which show 

that a small fraction of livestock farms 

with production contracts are operated 

by Black, Asian, American Indian, or 

Native Hawaiian producers (Figure 1).46

In Figure 1, the checkered bars represent 

the share of racial and ethnic groups 

among all livestock and poultry farms, 

and the colored bars indicate the share 

of production contracts received by each 

group. As indicated in Figure 1, 

American Indian, Black, Native 

Hawaiian, and Hispanic producers 

receive less than a proportional share of 

livestock and poultry production 

contracts relative to their respective 

populations. For example, Black 

producers and growers account for 1.6 

percent of U.S. farms by race and 

ethnicity and receive a 

disproportionately lower 0.5 percent of 

livestock and poultry contracts. White 

producers and growers, meanwhile, 

represent 91 percent of all farms, but 98 

percent of hog contracts and 97 percent 

of cattle contracts—a greater than 

proportionate share of livestock 

contracts, and at 90 percent, a lower 

than proportionate share of poultry 

contracts. Non-white racial and ethnic 

groups constitute a very small share of 

contracted livestock and poultry 

producers, which can be attributed to 

limited access to land and capital,47

having on average smaller operations, 

and discrimination. 


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Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 16103 

48USDA ERS, No date. Farming and Farm 

Income. Available at https://www.ers.usda.gov/ 

data-products/ag-and-food-statistics-charting-theessentials/farming-and-farm-income/ (last accessed 

9/8/23). GCFI income categories incude <$149,900, 

$150,000–$349,999, $350,000–$999,999, and 

≥$1,000,000. 

49Pew Research Center. June 19, 2012. The Rise 

of Asian Americans. Accessed at https://www.pew

research.org/social-trends/2012/06/19/the-rise-ofasian-americans/ on 10–13–23. 

Disparities are also found in income 

across racial and ethnic groups. It is 

difficult to disentangle historical 

discrimination—whether that be 

prejudicial administration of USDA 

farm policies, racial segregation laws, or 

discriminatory private lending policies, 

from current discrimination practiced 

by livestock and poultry companies. 

Figure 5 shows the percentage of 

livestock and poultry farms (omitting 

nonfamily farms) by the reported race or 

ethnicity, and categorized by the lowest 

level of Gross Cash Farm Income (GCFI), 

which is annual income before 

expenses, including cash receipts, farmrelated cash income, and government 

payments.48 These data indicate that 

livestock and poultry farms with 

producers who identify as American 

Indian, Black, Native Hawaiian, and 

Hispanic are more likely to be in the 

lowest income category (measured by 

GCFI <$150,999) than their white 

counterparts. Those farms with 

producers who identify as Asian are less 

likely than their White counterparts to 

fall into the lowest income group, which 

might be a factor of being relatively 

recent immigrants and not facing past 

discrimination.49 The fact that Black, 

Native Hawaiian, Native American, and 

Hispanic livestock and poultry farmers 

are more likely to be in the lower 

income GFCI category could be an effect 

of past discrimination, and it also could 

make such producers more vulnerable 

to current discriminatory behavior by 

packers. Markets dominated by one or a 

few large packers or live poultry dealers 

may also be less accessible to these 

lower income farms, which have limited 

financial or other economic resources 

with which to engage. 


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Figure 4. Percent of Farms Owned by Race and Ethnicity Compared to 

Percent of Farms that Received Livestock and Poultry Contracts 

White 

Hispanic 

Native 

HaWailan ) 

-~ 

Asian r' 

American 

Indian 

205 40'Ki 7~ 

■" of farms with Fed Cattle Contract ■" of Farms with Hog Contract 

ll!I "of Farms with Broiler or Meat Chicken Contract a" of Total Farms 

Data source: 2017 Agricultural Census, National Agricultural Statistical Service, USDA. 
16104 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

50Breneman, V., Cooper, J. Nemec Boeme, R. and 

Kohl, M., ‘‘Competition and Discrimination—is 

there is a relationship between livestock prices 

received and whether the grower is in a historically 

underserved group?’’ 2023 AAEA Annual Meeting, 

Washington, DC, July 23–July 25. 

51The Pew Research Center. March 1, 2023. ‘‘The 

Enduring Grip of the Gender Pay Gap.’’ Accessed 

at https://www.pewresearch.org/social-trends/2023/ 

03/01/the-enduring-grip-of-the-gender-pay-gap/ on 

09–25–2023, and World Economic Forum. July 

2023. Global Gender Gap Report 2023 Accessed at 

WEF_GGGR_2023.pdf (weforum.org) on 09–225– 

2023. 

Recent research conducted by the 

USDA’s Office of the Chief Economist 

and presented at the Agricultural & 

Applied Economics Association 50

suggests that certain ethnic or racial 

groups are receiving lower prices 

compared to White producers from 

regulated entities in livestock and 

poultry contracts. In some cases, the 

research showed statistically significant 

differences in prices received for 

livestock (cattle and hogs) and broiler 

products across ethnic or racial groups 

after controlling for variables such as 

farm size, region, type of marketing 

contract or channel, organic certification 

status, distance to closest packer, and 

size of closest packer. Specifically, 

Black and American Indian cattle 

producers, Black contract broiler 

producers, and Black and American 

Indian hog producers all received lower 

prices for their livestock products 

relative to White producers. However, 

the effect of many animal quality 

variables, such as weight per animal, 

dressing percentage, and yield grade, 

cannot be controlled for under this 

analysis because the data is not in the 

Census of Agriculture or other data sets 

organized by race and ethnicity. Thus, 

endowment differences, such as better 

land and more capital, that represent the 

legacy of historical discrimination may 

account for a portion of these price 

differentials. 

Differences in livestock and broiler 

prices could also be due, at least in part, 

to discrimination. Due to current data 

deficiencies, however, it is impossible 

to tell whether differences in prices 

received across ethnic or racial groups 

are due to current discriminatory 

practices, historic discrimination, or 

some combination thereof. These 

omitted variables may be correlated 

with race or ethnicity, and thus may 

account for a substantial portion of the 

price differentials. Additional data 

collection efforts may shed light on the 

role of omitted variables, such as animal 

size, thus helping to distinguish 

economic effects arising from current 

racial discrimination from disparate 

economic outcomes due to historical 

discrimination. 

Gender is also a basis of 

discrimination in livestock and poultry 

markets. According to the 2017 Census, 

livestock and poultry operations where 

principal operators are female received 

significantly lower market value for the 

livestock and poultry they sell. Female 

principal operators in livestock and 

poultry earned 53 cents per operation 

for every dollar earned by male 

principal operators per operation. By 

comparison, in the broader U.S. 

population, females earn 77 to 82 cents 

for every dollar earned by men in 

2022.51 Figure 6 shows that the 

difference in livestock and poultry sales 

by gender is about $117,000 less per 

operation for female principal operators, 

or 47 percent less, compared to male 

principal-operated farms. 

Disproportionately more female 

operators are found in the lower income 

classes relative to males, and a 

disproportionately higher number of 

male operators are found in the highest 

income classes. The value of livestock 

and poultry production per total acres 

owned by males and females is $0.22 

per acre for males and $0.18 per acre for 

females, or $0.82 per acre for female 

operators relative to every $1 per acre 

earned by male operators. Together, 

these data suggest that female 


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Figure 5. Percentage of Livestock and Poultry Family Farms by the Lowest 

GCFI Category(< $150,000), Race, and Ethnicity 

White 

Hispanic 

Native Hawaian 

Black 

Asian 

American Indian 

0'6 20% 

89" 

9% 

91% 

100'6 

Data source: 2017 Agricultural Census, National Agricultural Statistical Service, USDA. 
Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 16105 

producers—in livestock and poultry 

markets—achieve poorer economic 

outcomes than male producers. 

markets—achieve poorer economic 

outcomes than male producers. 

AMS also utilized a regression 

analysis showing support for disparities 

in income across different protected 

classes. Table 3 presents the empirical 

results of multivariate regression 

analysis of the 2017 Agricultural Census 

and other data by the USDA Office of 

the Chief Economist. Black and 

American Indian cattle and broiler 

producers, and Black and American 

Indian hog producers of owned hogs 

(hogs not sold under production 

contracts) all received lower prices for 

their livestock products relative to 

White producers. For example, Black 

and American Indian producers 

received around 5 percent lower broiler 

prices but no statistically significant 

decrease in payments for hogs delivered 

under production contracts. However, 

the effect of many animal quality 

variables, such as weight per animal, 

dressing percentage, and yield grade, 

cannot be controlled for under this 

analysis because the data is not in the 

Census of Agriculture or other data sets 

organized by race and ethnicity. Thus, 

endowment differences, such as better 

land and more capital, that represent the 

legacy of historical discrimination may 

account for a portion of these price 

differentials. Hawaiian contract hog 

producers received 68 percent higher 

prices even though producer location 

was controlled for in the analysis, but 

the analysis cannot control for some 

unknown factors associated with this 

relatively small cohort of producers that 

may account for this relatively large 

price effect. 


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Figure 6. Market Value of Livestock, Poultry, and Their Products Per Farm by 

Gender 

$0 

$248.86 

$50 $100 $150 $200 $250 

Market value ($1,000) per farm 

11 Any principal producer is female 

= Any principal producer is male 

■ Any producer is female 

■ Any producer is male 

$300 

Data source: 2017 Agricultural Census, National Agricultural Statistical Service, USDA. 
16106 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

52From the Agricultural Census data, some 

farmers who produce under production contracts 

also report some owned production as well. 

The results of an analysis presented in 

Table 3 found there is a statistically 

significant and positive relationship 

between female operators and price 

received for the owned-hog market, 

which includes producers of both 

contracted and owned hogs (the 

regression accounted for whether the 

producer was on a production contract 

or not through an explanatory variable), 

but which examines the price impact 

only on owned-hogs sold.52 However, 

for the production contract-only hog 

market, which makes up about 70 

percent of all hogs produced, this 

relationship becomes negative, though 

not at a statistically significant level 

(non-statistically significant results are 

shown as zero values in the table). From 

regression results not shown in Table 3, 

it appears that female contract hog 

producers who also produce owned 

hogs receive a higher price for owned 

hogs than female farmers who only 

produce owned hogs. This finding 

suggests that females with hog contracts 

face preferential prices relative to those 

females that do not hold contracts. 

The regression analysis used above to 

study the effect of sex on prices received 

in livestock and poultry markets also 

found a statistically significant negative 

relationship between age of a farm 

operator and price received in poultry 

and owned-hog markets, as well as a 

statistically significant negative 

relationship between the experience of 

a farm operator and price received in 

the contract hog market. That is, as 

producers and growers age in the 

owned-hog and poultry markets and 

gain experience in the contract hog 

market, average price received declines. 

However, the same finding was not 

evident in cattle markets, where the 

relationship between increasing 

producer age and price is positive and 

statistically significant. 

Gender is also a basis of 

discrimination in livestock and poultry 

markets. According to the 2017 Census, 

livestock and poultry operations where 

principal operators are female received 

significantly lower market value for the 

livestock and poultry they sell. Female 

principal operators in livestock and 

poultry earned 53 cents per operation 

for every dollar earned by male 

principal operators per operation. By 

comparison, in the broader U.S. 

population, females earn 77 to 82 cents 

for every dollar earned by men in 


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Table 3: Impact of Personal Characteristics on the Price Received per 

Animal Delivered 

Race, ethnicity, or Impact of race, ethnicity, or gender on price received 

gender of operators per animal delivered 

Broilers All Hogs Contract Hogs Only Cattle 

Black -4.73% -7.21 % 0.00% -2.53% 

American Indian -5.49% -8.63% 0.00% -4.08% 

Hawaiian 0.00%* 0.00% 67.68% 0.00% 

Asian 0.00% 0.00% 0.00% 0.00% 

Female 0.00% 2.83% 0.00% 0.00% 

Spanish Origin 0.00% 0.00% 0.00% -2.55% 

Impact on price received with respect to age or 

experience 

Age** -0.12% -0.05% NIA*** 0.01% 

Experience**** NIA NIA -0.24% NIA 

Source: 2017 Agricultural Census, National Agricultural Statistics Service, USDA 

Notes: These results drawn from multivariate regression analysis assume all respondents (up to four) to the 

2017 Agricultural Census survey have the personal characteristic in the row of the table. The Agricultural 

Census does not include information the size of the animals delivered or other quality characteristics. 

Hence, if these omitted variables are correlated with the personal characteristics of the producers, they can 

account for the impact ofrace/ethnicity/gender on prices. As such, it is impossible to separately identify 

price impacts of current ongoing racism from impacts associated with historic racism ( e.g., price 

differences due smaller animals on account oflower fmancial endowments). 

*If the underlying coefficient estimate used to make this estimate is ofless than 10 percent statistical 

significance, the result in the table is set equal to zero. 

**Average age of the individuals who were involved in the decisions of the farm operations and who 

responded to the Agricultural Census Survey. 

***Average years of experience of the individuals who were involved in the decisions of the farm 

operations and who responded to the Agricultural Census Survey. 

****NIA means the data is not available. 
Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 16107 

53The Pew Research Center. March 1, 2023. ‘‘The 

Enduring Grip of the Gender Pay Gap.’’ Accessed 

at https://www.pewresearch.org/social-trends/2023/ 

03/01/the-enduring-grip-of-the-gender-pay-gap/ on 

09–25–2023, and World Economic Forum. July 

2023. Global Gender Gap Report 2023 Accessed at 

WEF_GGGR_2023.pdf (weforum.org) on 09–225– 

2023. 54USDA, Publications for Cooperatives, available 

at https://www.rd.usda.gov/resources/publicationsfor-cooperatives (See generally USDA’s published 

research reports that document the history and 

importance of agricultural cooperatives that allow 

farmers to negotiate collectively for prices on 

product either sold or bought by input or buyer 

entities. For example, USDA in Farm Bargaining 

Cooperatives: Group Action, Greater Gain (1994) 

describes one harrowing instance in which 

members of a cooperative initially hesitated in 

bringing a complaint against a processor that 

allegedly punished them by refusing to buy their 

fruit due to their association with the cooperative; 

but eventually successfully brought the complaint 

and, after a lengthy legal process, won punitive 

damages and the processor’s agreement to buy 

product); Vaheesan, S. and Schneider, N., 2019. 

Cooperative Enterprise as an Antimonopoly 

Strategy. Penn St. L. Rev., 124, p.1. Accessed at 

https://elibrary.law.psu.edu/cgi/ 

viewcontent.cgi?article=1000&context=pslr (Oct. 

2023). 

55Baldree v. Cargill, Inc. and United States v. 

Cargill, Inc., et al., 758 F.Supp.704 (M.D.Fla. 1990). 

Arkansas Valley Industries, Inc., Ralston Purina 

Company, and Tyson’s Foods, Inc., 27 Ag. Dec. 84 

(January 23, 1968), and In Re: Curtis Davis, Leon 

Davis, and Moody Davis d/b/a Pelahatchie Poultry 

Company, 28 Ag. Dec. 406 (April 3, 1969). 

56For the purposes of this preamble, a 

cooperative is an incorporated or unincorporated 

association of producers, with or without capital 

stock, formed for mutual benefit of its members. 

Farm cooperatives are formed under State, not 

Federal law, even though cooperatives have Federal 

protections. See James B. Dean & Thomas Earl Geu, 

The Uniform Limited Cooperative Association Act: 

An Introduction, 13 Drake J. Agric. L. 63, 67 (2008) 

(‘‘There is, however, no single type of cooperative. 

Although much of the law that has developed 

around cooperatives has developed with respect to 

agricultural cooperatives, cooperatives exist in 

many areas . . . including housing, insurance, 

banking, health care, and retail sales, among 

others.’’). Cooperatives can both be buyers and 

sellers of agricultural products. Cooperatives made 

up of sellers, because they jointly fix the prices of 

their goods, are legally permitted to market the 

products they produce when the cooperative 

organization meets the requirements of the CapperVolstead Act (see 7 U.S.C. 291)7 U.S.C. 291) or the 

Clayton Act (see 15 U.S.C. 17).15 U.S.C. 17). 

2022.53 Figure 7 shows that the 

difference in livestock and poultry sales 

by gender is about $117,000 less per 

operation for female principal operators, 

or 47 percent less, compared to male 

principal-operated farms. 

Disproportionately more female 

operators are found in the lower income 

classes relative to males, and a 

disproportionately higher number of 

male operators are found in the highest 

income classes. The value of livestock 

and poultry production per total acres 

owned by males and females is $0.22 

per acre for males and $0.18 per acre for 

females, or $0.82 per acre for female 

operators relative to every $1 per acre 

earned by male operators. Together, 

these data suggest that female producers 

in livestock and poultry markets achieve 

lesser economic outcomes than male 

producers. 

Producers have also been targeted by 

processors that discriminate or retaliate 

against them for forming or being 

members of a cooperative because of the 

check on dominant firm bargaining 

power that cooperatives provide.54

Growers and experts on agricultural 

cooperatives have reported numerous 

instances of live poultry dealers taking 

adverse actions against producers for 

their participation in agricultural 

cooperative activities.55

Regulated entity resistance to 

producer cooperatives is not difficult to 

understand—and indeed has been the 

basis for congressional action in the 

past. The increased bargaining power 

that cooperatives give to their members 

makes them a target for opposition or 

curtailment by regulated entities. In a 

market characterized by concentration 

of larger market intermediaries, 

cooperatives 56 can assist producers in 

promoting equal access to the market 


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Figure 7. Market Value of Livestock, Poultry, and Their Products Per Farm by 

Gender 

$0 

$248.86 

$50 $100 $150 $200 $250 

Market value ($1,000) per farm 

u Any principal producer is female 

= Any principal producer is male 

■ Any producer is female 

■ Any producer is male 

$300 

Data source: 2017 Agricultural Census, National Agricultural Statistical Service, USDA. 
16108 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

57At least some of the drafters of the Act fully 

expected the Act to be consonant to the goals of 

cooperatives: ‘‘My own conviction is that the 

cooperative effort of producers and consumers to 

get closer together in an effort to reduce the spread 

between them is the most favorable tendency of our 

time, so far as the question of marketing and 

distribution is concerned.’’ 61 Cong. Rec. 1882 

(1921). 

58 7 U.S.C. 2301. 

59 61 Cong. Rec. 1882 (1921). 

60U.S. Department of Justice & U.S. Department 

of Agriculture, Public Workshops, Exploring 

Competition Issues in Agriculture Livestock 

Workshop: A Dialogue on Competition Issues 

Facing Farmers in Today’s Agricultural 

Marketplaces, Fort Collins, Colorado August 27, 

2010. Available at https://www.justice.gov/sites/ 

default/files/atr/legacy/2012/08/20/coloradoagworkshop-transcript.pdf. 

61United States Department of Justice, United 

States Department of Agriculture, Public 

Workshops Exploring Competition in Agriculture: 

Poultry Workshops, (2010), available at https://

youtu.be/8QJ_

K06lp5M?si=VGhP8lzw3f6tdM4B&t=305; https://

youtu.be/8CvEGyMQ9v8?si=_

tvtJVtlNmWDxedQ&t=3675; https://youtu.be/8QJ_

K06lp5M?si=VGhP8lzw3f6tdM4B&t=305 (In which 

poultry growers discussed numerous instances of 

regulated entities terminating their contracts, 

reducing the quality of their feed, or otherwise 

intimidating them for participating in cooperative 

activities). 

and enhance the bargaining power of 

smaller producers. At the same time, 

cooperatives are responsive to the needs 

of regulated entities and the market for 

greater volume, as opposed to 

negotiating with many smaller 

producers.57 Yet precisely that presence 

of enhanced bargaining power, which 

cooperatives give to their members, 

makes them a target for opposition or 

curtailment by regulated entities. 

Congress has affirmed that cooperatives 

are necessary to protect the marketing 

and bargaining position of individual 

farmers and that interference with this 

right is not only contrary to the public 

interest but damaging to the free 

market.58 As stated in the Congressional 

Record ‘‘. . . wherever waste and 

uneconomic practices are discovered 

they should be eliminated, and 

whenever improvement can be made by 

cooperative effort these improvements 

should be sanctioned and adopted by 

those interested in our marketing 

system. . . .’’ 59

Producers have indicated to AMS that 

increased use of cooperatives is 

necessary because of the rise of abusive 

conduct aggravated by concentration in 

the markets and the decline in 

marketing options for smaller 

producers. For example, small cattle 

producers have expressed their concern 

to AMS about packers’ disparate 

treatment of large and small producers. 

Large packers have commonly shown 

limited interest in dealing with 

producers that operate on a smaller 

capacity. Packers often prefer to buy 

large numbers of animals at once to 

lower transaction costs,60 and if a single 

producer is unable to meet such 

demand, that producer is unable to 

compete in the industry. Smaller 

livestock producers can join together 

through cooperatives to achieve scale 

and meet buyers’ volume requirements. 

Thus, cooperatives can help smaller 

producers gain business they would 

otherwise be unable to compete for in 

light of the current market structure. 

Moreover, Congress has encouraged the 

formation of agricultural cooperatives 

and, under the AFPA, has provided 

enhanced protection for them in the 

marketplace. Given that policy and 

statutory judgment, AMS interprets the 

Act to reinforce that objective. 

Accordingly, discriminating against a 

cooperative, absent a legitimate basis set 

forth under this final rule, is unjust and 

violative of the Act. 

Additionally, cooperatives 

counterbalance the ability of regulated 

entities to exert market power against 

smaller or more vulnerable producers. 

Facing the threat of such a 

counterbalance, regulated entities have 

over time stymied producers’ ability to 

form and utilize cooperatives. AMS has 

heard numerous reports of regulated 

entities terminating growers’ or 

producers’ contracts for their attempts 

to form cooperatives, as well as reports 

of the chilling effect such action has on 

any future attempts to do so.61 More 

recently, cooperatives in the cattle 

sector have been frustrated in their 

effort to negotiate collectively. In recent 

years, the number of livestock and 

poultry cooperatives has declined, as 

shown in the figure below. While many 

reasons for that decline are unconnected 

to the discrimination prohibited in this 

rule, AMS believes cooperatives serve a 

crucial function in the marketplace and 

need protection against unjust 

discrimination by regulated entities. 

This final rule will protect producers 

who wish to form cooperatives and will 

strengthen the marketing and bargaining 

position of smaller or more vulnerable 

producers by enabling them to pool 

resources, coordinate, compete more 

effectively, and negotiate for fair and 

appropriate terms in the open market 

without fear of prejudice or 

discrimination from larger market 

intermediaries. 


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Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 16109 

62 Government Accountability Project, Comments 

on Proposed Rule: Inclusive Competition and 

Market Integrity, (AugJan. 2022), https://

www.regulations.gov/comment/AMS-FTPP-21-0045- 

042720232), https://www.regulations.gov/comment/ 

AMS-FTPP-21-0045-0427 (Describing instances in 

which some producers described racially 

prejudicial treatment received from regulated 

entities, including requirements to do additional 

work, mockery, and exploitative behavior). Farm 

Action, Comments on Proposed Rule: Inclusive 

Competition and Market Integrity, (AugJan. 20232), 

https://www.regulations.gov/comment/AMS-FTPP21-0045-0435 (Listing Supreme Court and lower 

court cases finding these forms of discrimination to 

be essentially unjust). 

63Agricultural Advocacy Group. ‘‘Comment on 

AMS–FTPP–21–0045: Inclusive Competitive and 

Market Integrity Under the Packers and Stockyards 

Act’’ (received Jan. 17, 2023), available at https:// 

www.regulations.gov/comment/AMS-FTPP-21-0045- 

0434. https://www.regulations.gov/comment/AMSFTPP-21-0045-0434. 

64Agricultural Advocacy Group. ‘‘Comment on 

AMS–FTPP–21–0045: Inclusive Competition and 

Market Integrity Under the Packers and Stockyards 

Act,’’ available at Regulations.gov. 

65Agricultural Advocacy Group. ‘‘Comment on 

AMS–FTPP–21–0045: Inclusive Competition and 

Market Integrity Under the Packers and Stockyards 

Act,’’ available at Regulations.gov. 

66See, e.g., Meat Industry Trade Association, 

‘‘Comment on AMS–FTPP–21–0045: Inclusive 

Competitive and Market Integrity Under the Packers 

and Stockyards Act’’ (received Jan. 17, 2023), 

available at https://www.regulations.gov/comment/ 

AMS-FTPP-21-0045-0424; https://

www.regulations.gov/comment/AMS-FTPP-21-0045- 

0424; Industry Trade Association, ‘‘Comment on 

AMS–FTPP–21–0045: Inclusive Competitive and 

Market Integrity Under the Packers and Stockyards 

Act’’ (received Jan. 17, 2023), available at https:// 

www.regulations.gov/comment/AMS-FTPP-21-0045- 

04249; https://www.regulations.gov/comment/AMSFTPP-21-0045-0424; https://www.regulations.gov/ 

comment/AMS-FTPP-21-0045-0424 Live Poultry 

Dealer;, ‘‘Comment on AMS–FTPP–21–0045: 

Inclusive Competitive and Market Integrity Under 

the Packers and Stockyards Act’’ (received Jan. 17, 

2023), available at https://www.regulations.gov/ 

comment/AMS-FTPP-21-0045-0419. 

67 Industry Trade Association, ‘‘Comment on 

AMS–FTPP–21–0045: Inclusive Competitive and 

Market Integrity Under the Packers and Stockyards 

Act’’ (received Jan. 17, 2023), available at https:// 

www.regulations.gov/comment/AMS-FTPP-21-0045- 

0418. 

68See, e.g., Farm Bureau, ‘‘Comment on AMS– 

FTPP–21–0045: Inclusive Competitive and Market 

Integrity Under the Packers and Stockyards Act’’ 

(received Jan. 17, 2023), available at https://

www.regulations.gov/comment/AMS-FTPP-21-0045- 

0426; Other Association or Non-Profit, ‘‘Comment 

on AMS–FTPP–21–0045: Inclusive Competitive and 

Market Integrity Under the Packers and Stockyards 

Act’’ (received Jan. 17, 2023), available at https:// 

www.regulations.gov/comment/AMS-FTPP-21-0045- 

0416; https://www.regulations.gov/comment/AMSFTPP-21-0045-0426; Other Association or NonProfit, ‘‘Comment on AMS–FTPP–21–0045: 

Inclusive Competitive and Market Integrity Under 

the Packers and Stockyards Act’’ (received Jan. 17, 

2023), available at https://www.regulations.gov/ 

comment/AMS-FTPP-21-0045-0416; https://

www.regulations.gov/comment/AMS-FTPP-21-0045- 

0416; Other Association or Non-Profit, ‘‘Comment 

Continued 

Numerous public comments on the 

proposed rule supported the prohibition 

of undue prejudice based on protected 

bases such as those described above. In 

expressing support for the proposed 

‘‘market vulnerable individual (MVI)’’ 

approach to addressing undue 

prejudices, several agricultural 

advocacy groups recommended that 

AMS explicitly enumerate protected 

bases in its definition of MVI. MVI, as 

defined in the proposed rule, is a person 

who is a member, or who a regulated 

entity perceives to be a member, of a 

group whose members have been 

subjected to, or are at heightened risk of, 

adverse treatment because of their 

identity as a member or perceived 

member of the group without regard to 

their individual qualities. The 

organizations said these protected bases 

should include, but not be limited to, 

the protected classes of race, color, 

national origin, religion, sex, sexual 

orientation, disability, age, income 

derived from a public assistance 

program, and political beliefs.62 An 

agricultural advocacy group commented 

in support of a protected-bases 

approach, saying that ‘‘fair access to 

markets for growers, farmers, and 

ranchers should be based on their 

farming and business skills, not on their 

membership in any of the above 

groups.’’ 63 Another advocacy group 

added that defining protected bases 

‘‘will be an appropriately flexible 

concept with which to enforce 

enhanced protections against 

discrimination in the marketplace.’’ 64

The group continued: ‘‘Given the 

history of discrimination that farmers of 

color have faced over the course of 

American history, these producers 

should not be made to relitigate their 

status as market vulnerable in any given 

complaint.’’ 65

Multiple commenters from the meat 

and poultry industry who opposed the 

MVI approach nevertheless indicated 

that they would support rules targeting 

discrimination on specific prohibited 

bases.66 A livestock industry association 

said discrimination on these types of 

bases is ‘‘reprehensible and should be 

remediated using the appropriate legal 

avenues.’’ 67 Several national and State 

farm bureaus expressed support for the 

rule’s action to protect producers facing 

undue prejudice and unjust 

discrimination.68


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Figure 8: Decline in the number of livestock and poultry cooperatives in 2000-2022 

90 

2005 2010 2015 2020 

Year 

Data source: "Publications for Cooperatives," USDA Rural Development, available at 

https:/ /www.rd.usda.gov/resources/publications-for-cooperatives (Number of livestock and poultry 

cooperatives, produced from compiling internal USDA records, including from directories and public 

documents from 2000 - 2022. Number summarized shows the number of active cooperatives in the 5-year 

interval, e.g.: for 1992, from 1990 to 1995; for 1997, from 1993 - 2000). 
16110 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

on AMS–FTPP–21–0045: Inclusive Competitive and 

Market Integrity Under the Packers and Stockyards 

Act’’ (received Jan. 17, 2023), available at https:// 

www.regulations.gov/comment/AMS-FTPP-21-0045- 

0441. 

69 140 S. Ct. at 1737, available at https://

www.supremecourt.gov/opinions/19pdf/17-1618_

hfci.pdf (The Supreme Court has held that the 

prohibition on discrimination ‘‘because of . . . sex’’ 

covers discrimination on the basis of gender 

identity and sexual orientation). 

70See, e.g., U.S. Department of Justice, ‘‘The 

Attorney General’s 2021 Annual Report to Congress 

on Fair Lending Enforcement,’’ available at https:// 

www.justice.gov/media/1259491/dl?inline. 

71 15 U.S.C. 1691; 7 U.S.C. 2301 et seq. (See below 

section, Provisions of the Final Rule—Undue 

Prejudice and Unjust Discrimination, that discusses 

the adoption of other Federally listed bases as part 

of this rule). 

72U.S. Department of Justice & U.S. Department 

of Agriculture, Public Workshops Exploring 

Competition in Agriculture, Poultry Workshop, May 

21, 2010, Alabama A&M University Normal, 

Alabama. Available at Poultry Workshop Transcript 

(justice.gov) (https://youtu.be/j11GXzvA7u0?si=

6YNtz2SJH5T81FJZ&t=2656; https://youtu.be/8QJ_

K06lp5M?si=C1HA0i84opqaoIn8&t=1051). 

73U.S. Department of Justice & U.S. Department 

of Agriculture, Public Workshops Exploring 

Competition in Agriculture, Livestock Industry, 

August 27, 2010, Fort Collins, Colorado, Available 

at https://www.justice.gov/atr/events/publicworkshops-agriculture-and-antitrust-enforcementissues-our-21st-century-economy-10 (https://

youtu.be/j11GXzvA7u0?si=6YNtz2SJH5

T81FJZ&t=2656https://youtu.be/Ygerhjjp0Is?si=

WMS4YGdAjNtIsBgH&t=1833; https://youtu.be/ 

tF4Dr-O-l8s?si=BZJQYN-rkp-qqvjN&t=1158; 

numerous producers, including the previous 

president of the Kansas Cattlemen’s Association, 

discussed instances in which they experienced 

retaliation from the largest packers. For example, 

one producer described how they decided to allow 

other packer buyers first opportunity to buy cattle 

in response to the packer not selecting them for a 

contracting agreement. The producer said that the 

packer told ‘‘his buyer to quit coming into our 

yard.’’ Another producer agreed, describing an 

incident in which they perceived that one of the 

largest packers possibly retaliating against them for 

previous litigation: the producer described how the 

packer hung a ‘‘No Trespassing’’ sign on the 

producer’s door and began offering a ‘‘five-minute 

window’’ to buy cattle). 

74Lina Khan, ‘‘Obama’s Game of Chicken,’’ Wash. 

Monthly (2012), https://washingtonmonthly.com/ 

magazine/novdec-2012/obamas-game-of-chicken/ 

(Recounting testimony by Tom Green, an Alabama 

farmer who contested a contract and lost their farm: 

‘‘We did not give up a fundamental right to access 

the public court . . . which is guaranteed by our 

Constitution, regardless of price. I had flown too 

many combat missions defending that Constitution 

to forfeit it. It was truly ironic that protecting one 

right, we lost another. We lost the right to 

property’’). Isaac Arnsdorf, ‘‘How a Top Chicken 

Company Cut Off Black Farmers, One by One,’’ 

Propublica (June 26, 2019), https://

www.propublica.org/article/how-a-top-chickencompany-cut-off-black-farmers-one-by-one 

(Describing how one farmer participated in the 2010 

USDA–DOJ workshops and ‘‘. . . never got another 

chicken after going to that meeting over there in 

Alabama. . . They put me slap out of business’’). 

75House Chair David Scott D–GA, opening 

remarks, U.S. House, Committee on Agriculture, 

‘‘An Examination of Price Discrepancies, 

Transparency, and Alleged Unfair Practices in 

Cattle Markets,’’ April 27, 2022, (14 min: 24 sec), 

available at https://anchor.fm/houseagdems/ 

episodes/An-Examination-of-Price-Discrepancies-- 

Transparency--and-Alleged-Unfair-Practices-inCattle-Markets-e1hpvo8/a-a7r40dk. 

76U.S. Senate Committee on Agriculture, 

Nutrition, and Forestry, ‘‘Legislative hearing to 

review S. 4030, the Cattle Price Discovery and 

Transparency Act of 2022, and S. 3870, the Meat 

and Poultry Special Investigator Act of 2022,’’ April 

26, 2022, (1 hour 39 min), available at https://

www.agriculture.senate.gov/hearings/legislativehearing-to-review-s-4030-the-cattle-price-discoveryand-transparency-act-of-2022-and-s3870-the-meatand-poultry-special-investigator-act-of-2022. 

Discrimination on the bases of race, 

color, religion, national origin, sex 

(including sexual orientation and 

gender identity),69 disability, marital 

status, or age is recognized throughout 

economic markets as impermissible, yet 

commonly occurring, bases for 

discrimination.70 AMS recognizes the 

other Federal laws and authorities that 

justify these bases, finds that these bases 

are consistent with its understanding 

drawn from complaints and in the field, 

and accordingly adopts these bases as 

part of this rule.71 Removing prejudicial 

barriers to the market will enhance 

producers’ economic bargaining power, 

support investment in rural America, 

assure the next generation that taking 

over the farm can be a wise economic 

decision, and otherwise enhance 

economic opportunity and vitality in 

communities facing higher business and 

labor market concentration and the 

conduct addressed by this rule. 

AMS finds that discrimination 

continues to occur through adverse 

actions described in the inexhaustive 

list offered in the final rule. The list 

includes offering contract terms that are 

less favorable than those generally or 

ordinarily offered, refusing to deal, 

performing under or enforcing a 

contract differently than with similarly 

situated producers, requiring 

modifications to contracts on terms that 

are less favorable than the existing 

contract with the covered producer or 

only offering to renew contracts on 

terms that are less favorable than those 

of the existing contract with the covered 

producer, and terminating or not 

renewing a contract. 

As discussed further in Section VII— 

Comment Analysis, producers have 

indicated that regulated entities 

continue to engage in these types of 

discriminatory actions. 

ii. Retaliation as Discrimination 

Many producers across all animal 

species have expressed concerns about 

being retaliated against for engaging in 

legitimate business and advocacy 

activities inextricably linked to 

livestock and poultry markets. Contract 

poultry growers and hog producers have 

expressed to USDA that they have 

experienced—and consistently fear— 

retaliation from live poultry dealers and 

packers for communicating with each 

other, with their dealer’s and packer’s 

competitors, and with governmental 

officials, as well as for forming 

associations and cooperatives, 

exercising contract or legal rights, or 

being a witness in proceedings against 

the regulated entity.72 Cattle producers 

have similarly expressed fear that 

packers will refuse to offer bids on 

livestock, or purchase livestock from 

disfavored producers, and they have 

highlighted other, more subtle 

retaliatory behaviors, like delaying 

delivery or shipment, for engaging in 

similar activities.73 Producers believe 

the ability to communicate with others, 

to form associations and cooperatives, to 

exercise legal rights, and to witness 

against regulated entities are critical to 

free participation in the livestock and 

poultry markets. Inhibition of these 

freedoms jeopardizes producers’ ability 

to obtain the full value of their livestock 

and poultry products and services. 

Indeed, producers have reported to 

AMS over the years that retaliation by 

regulated entities—or threat thereof—for 

producers’ exercise of these rights is 

significant enough to place a producer’s 

entire farm at risk. This reported 

conduct is the type of behavior AMS 

aims to prohibit through this 

rulemaking.74

This is a persistent problem. As 

recently as April 2022, threats and fear 

of retaliation interfered with witness 

testimony at each of the House and 

Senate Agriculture Committees’ 

hearings on livestock competition 

practices. In his opening remarks, House 

Agriculture Committee Chair David 

Scott noted, ‘‘We were supposed to have 

a 4th witness, a rancher, on our panel, 

but due to intimidation and threats to 

this person’s livelihood, to this person’s 

reputation, they chose not to participate 

out of fear. Witness intimidation is 

unacceptable. . . .’’ 75

The day before, Senator Deborah 

Fischer had stated, ‘‘I wish we had a 

Nebraska producer here, but as is noted 

in their letter, none of our producer 

members we encouraged to testify were 

willing to put themselves out front for 

fear of possible retribution from other 

market participants, an unfortunate 

reality of today’s cattle industry.’’ 76

In response to the proposed rule, 

commenters expressed support and 

opposition for the proposal to establish 

prohibitions against retaliatory 

practices. Several industry associations 

opposed the proposed rule, indicating it 

is duplicative and therefore not 

necessary. These commenters 

contended the conduct addressed in the 


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77U.S. Department of Justice & U.S. Department 

of Agriculture, Public Workshops Exploring 

Competition in Agriculture, Poultry Workshop, May 

21, 2010, Alabama A&M University Normal, 

Alabama. Available at Poultry Workshop Transcript 

(justice.gov); see also Lina Khan, ‘‘Obama’s Game of 

Chicken,’’ The Washington Monthly, Nov. 2012, 

available at 

78Oscar Hanke, ed., American Poultry History, 

1823–1973 (Madison, Wisc., 1974), 384–85. Fite, 

Cotton Fields No More, 201; Peck, A, (2006), ‘‘State 

regulation of production contracts.’’ University of 

Arkansas National Center for Law Research and 

Information, available at http://nationalaglaw

center.org/wp-content/uploads/assets/articles/ 

peck_contractregulation.pdf; Stephen F. Strausberg, 

From Hills and Hollers: Rise of the Poultry Industry 

in Arkansas (Fayetteville, Ark., 1995), 136; 

Heffernan, W. D., (1984), Constraints in the U.S. 

poultry industry. Research in Rural Sociology and 

Development, 1, 237–260 (Researchers have 

documented the increased incidence of producers’ 

complaints and decreasing satisfaction in the 

industry beginning in the 1980s, which coincided 

with increasing concentration of the industry. 

Weinberg writes how, in 1960, 19 firms processed 

30 percent of total US poultry processed and that 

producers who entered the business tended to 

achieve upward mobility. In the 1970s, only 8 firms 

processed the same percent of poultry. This trend 

accompanied an increased incidence of grower 

dissatisfaction. Gordy notes how ‘‘loss of 

independence and lower incomes caused some 

growers to become disenchanted.’’ Fite observed 

how poultry farmers were ‘‘controlled and 

sometimes exploited by their suppliers.’’ Peck notes 

how dissatisfaction by growers prompted State 

attorneys general to propose a 3-day right of review 

in a model producer protection act in the early 

2000s. In 2010, the USDA and DOJ hosted a series 

of workshops in which growers raised concerns 

about retaliation in the industry. These trends, 

which occurred alongside increased productivity 

gains and use of technology, coincided with exits 

in the industry. As Weinberg documented, in 

Georgia, in 1950, 1176 Hall County farms sold 6.8 

million chickens; in 1992, only 192 sold 44.3 

million chickens). 

79See, e.g., U.S. Department of Justice & U.S. 

Department of Agriculture, Public Workshops 

Exploring Competition in Agriculture, Poultry 

Workshop, May 21, 2010, Alabama A&M University 

Normal, Alabama, available at https://youtu.be/ 

8CvEGyMQ9v8?t=3135 (in which poultry growers 

described how companies seemingly arbitrary 

mandated expensive upgrades). 

80Fehr, Ernst, and Simon Ga ̈chter. ‘‘Fairness and 

retaliation: The economics of reciprocity.’’ Journal 

of economic perspectives 14, no. 3 (2000): 159–181. 

81See, e.g., Midwest Farmers v. United States, 64 

F. Supp. 91, 95 (D. Minn. 1945); In re: Frosty Morn 

Meats, Inc., 7 B.R. 988, 1020 (M.D. Tenn. 1980). 

82Other Association or Non-Profit, ‘‘Comment on 

AMS–FTPP–21–0045: Inclusive Competitive and 

Market Integrity Under the Packers and Stockyards 

Act’’ (received Jan. 17, 2023), available at https:// 

www.regulations.gov/comment/AMS-FTPP-21-0045- 

0423. 

83C. Robert Taylor, ‘‘Harvested Cattle, 

Slaughtered Markets,’’ April 27, 2022, 7–9, 

available at https://www.antitrustinstitute.org/workproduct/aai-advisor-robert-taylor-issues-newanalysis-on-the-market-power-problem-in-beef-laysout-new-policy-framework-for-ensuringcompetition-and-fairness-in-cattle-and-beefmarkets/. 

proposed rule is not a widespread 

problem and is already prohibited under 

the Act. Other commenters supported 

the rule. One organization cited a recent 

anonymous survey of contract growers it 

had conducted. Multiple respondents 

had experienced retaliation from 

integrators and said integrators regularly 

terminate contracts with farmers who 

engage in whistleblowing activities. 

These contract terminations leave 

growers with substantial debt tied up in 

specialized, single-use structures built 

as a condition of their contractual 

agreements. Although comments in 

response to the proposed rule differ 

greatly regarding the need for this rule, 

commenters generally do not disagree 

that discriminatory and retaliatory 

conduct is harmful to producers and 

offers no procompetitive benefits. For 

these reasons, AMS needs to use its 

statutory authority to provide a 

regulatory framework for prohibiting 

retaliatory behavior by regulated entities 

against covered producers. Establishing 

regulatory protections to prohibit 

regulated entities from retaliating 

against producers engaging in lawful 

activity will help promote fair trade 

practices and competitive markets. 

In recent years, producers have been 

increasingly vulnerable to harms from 

retaliatory behavior due to the market 

power afforded regulated entities under 

contracts that can reach further down 

into livestock and poultry production 

and/or are bilateral. This is in contrast 

to past circumstances where these 

relationships were intermediated 

through an institution such as a 

stockyard (auction) subject to 

heightened regulatory duties around 

nondiscrimination. 

As regulated entities have obtained 

greater control over the input industries, 

particularly in poultry, producers are 

increasingly dependent upon regulated 

entities for success. That dependence, in 

combination with high levels of debt, 

leaves producers vulnerable to the 

retaliation that regulated entities can 

exact through input distribution and in 

other ways. Growers have for years 

reported punitive delivery of inputs to 

deter their exercise of a wide range of 

legal rights and remedies that would 

enable them to earn the full value of 

their services.77 78

Based on complaints and industry 

experience, AMS is aware that 

retaliation by regulated entities may 

take many forms, such as canceling 

contracts, selectively enforcing contract 

terms, refusing to deal or negotiate, or 

otherwise impairing an individual’s or 

group of producers’ ability to operate.79

In contrast, in more competitive 

markets, producers facing retaliation 

can more easily avoid or mitigate 

adverse impacts by simply finding other 

entities with whom to do business. 

Without choices, producers are at the 

mercy of the types of abuses the Act was 

designed to prevent—market abuses that 

inhibit producers’ ability to get the full 

value of their products and services. 

Ultimately, regulated entities may 

retaliate for various reasons, but none 

have any role in or benefit to the 

competitive functioning of the market.80

As discussed below in Section VII— 

Comment Analysis, in response to the 

proposed rule, commenters expressed 

extensive agreement with the need to 

establish prohibitions against retaliatory 

practices. 

iii. Deceptive Practices 

The Packers and Stockyards Act has 

long recognized that integrity and 

honesty are vital to the marketing of 

livestock and, therefore, to the 

efficiency with which these markets 

supply meat to the American 

consumer.81 This rulemaking is a 

response, in part, to the range of 

complaints lodged with USDA, 

Congress, and the media over the years 

regarding inaccurate, incomplete, or 

otherwise false or misleading 

statements, or omission of material 

information that affects decision-making 

or access to markets by producers. 

These complaints reflect, in part, 

changed industry contracting norms or 

a market environment where the 

prevalent norms result in more acute 

harms to producers. For example, 

packers and industry representatives 

have routinely indicated that producers 

may choose the form of pricing 

mechanism for their transactions. 

However, as cash-negotiated markets 

have declined, producers have 

increasingly complained to USDA that 

they are not provided such a choice, and 

are commonly given a take-it-or-leave-it 

offer to buy their cattle off of a pricing 

formula provided by the company.82

Producers have complained they have 

been told that packers refuse to buy 

their cattle on the grounds they are not 

of sufficiently high quality or that 

formula market arrangements are 

necessary to incentivize such quality, 

when the cattle being offered were of no 

less quality than those the packer 

procured under other marketing 

arrangements.83

Poultry producers have complained to 

USDA over the years regarding 

unfavorable provision of inputs made to 

certain producers despite statements by 

live poultry dealers that there are no 

differences in treatment. Producers have 

also complained to USDA of 

terminations, suspensions, or reductions 

in flocks on pretexts—i.e., on the 

provision of false or misleading 

information such as claims of animal 


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16112 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

84Wheeler v. Pilgrim’s Pride, 536 F.3d 455 (5th 

Cir. 2008); United States Department of Justice, 

United States Department of Agriculture, Public 

Workshops Exploring Competition in Agriculture: 

Poultry Workshop May 21, 2010; Normal, Alabama, 

https://www.justice.gov/sites/default/files/atr/ 

legacy/2010/11/04/alabama-agworkshoptranscript.pdf, last accessed 8/14/23. 

85Hays Livestock Comm’n Co. v. Maly Livestock 

Comm’n Co., 498 F.2d 925, 927 (10th Cir. 1974). 

86 7 U.S.C. 192(a). 

87Herbert Hovenkamp, ‘‘Does the Packers and 

Stockyards Act Require Antitrust Harm?’’ (2011). 

Faculty Scholarship at Penn Carey Law. 1862. 

https://scholarship.law.upenn.edu/faculty_

scholarship/1862 (‘‘subsections (a) and (b) appear to 

be tort-like provisions that are concerned with 

unfair practices and discrimination, but not with 

restraint of trade or monopoly as such’’); Peter 

Carstensen, The Packers and Stockyards Act: A 

History of Failure to Date, CPI Antitrust Journal 2– 

7 (April 2010) (‘‘Congress sought to ensure that the 

practices of buyers and sellers in livestock (and 

later poultry) markets were fair, reasonable, and 

transparent. This goal can best be described as 

market facilitating regulation.’’); Michael C. Stumo 

& Douglas J. O’Brien, Antitrust Unfairness vs. 

Equitable Unfairness in Farmer/Meat Packer 

Relationships, 8 Drake J. Agric. L. 91 (2003); 

Michael Kades, ‘‘Protecting livestock producers and 

chicken growers,’’ Washington Center for Equitable 

Growth (May 2022), https://equitablegrowth.org/ 

wp-content/uploads/2022/05/050522-packersstockyards-report.pdf (‘‘Section 202’s prohibitions 

on unjust discrimination and undue preference are 

not limited to conduct that destroys or limits 

competition or creates a monopoly. These 

provisions address conduct that impedes a wellfunctioning market and deprives livestock and 

poultry producers of the true value of their animals. 

Taken together, these provisions seek to prevent 

market abuses.’’). 

88See Bowman v. U.S. Dep’t of Agric., 363 F.2d 

81 at 85 (5th Cir. 1966). 

welfare contractual violations—when 

other reasons may exist for the adverse 

actions, including the discrimination 

and retaliation noted previously, or 

other unreasonable bases, such as a 

preference for family or friends of the 

local agent of a live poultry dealer or for 

a poultry grower connected to a senior 

executive of a live poultry dealer.84

Contract termination puts the grower at 

severe risk of significant economic loss. 

A production broiler house often has 

significant long-term financial 

obligations. The potential loss includes 

not only the loss of production income, 

but financing for construction, which 

often comes from mortgages on the 

grower’s farm or family home. 

Pretextual cancellation may make even 

the sale or transfer of the broiler 

production house impossible because 

purchasers may be unable to determine 

whether the broiler houses have value. 

As discussed in Section VII— 

Comment Analysis, comments 

underscored the need to address 

deceptive practices in this rulemaking. 

III. Authority 

Congress enacted the Act to promote 

fairness, reasonableness, and 

transparency in the marketplace by 

prohibiting practices that are contrary to 

these goals. AMS is issuing these 

regulations under the Act’s provisions 

prohibiting undue prejudice, unjust 

discrimination, and deception to 

provide for clearer, more effective 

standards to govern the modern 

marketplace and to better protect, 

through compliance and enforcement, 

individually harmed producers. 

Enacted in 1921 ‘‘to comprehensively 

regulate packers, stockyards, marketing 

agents and dealers,’’ 85 the Act, among 

other things, prohibits actions that 

hinder integrity and competition in the 

livestock and poultry markets. Section 

202(a) of the Act states that it is 

unlawful for any packer, swine 

contractor, or live poultry dealer to 

engage in or use any unfair, unjustly 

discriminatory, or deceptive practice or 

device.86 Section 202(b) of the Act states 

that it is unlawful for any packer, swine 

contractor, or live poultry dealer to 

make or give any undue or unreasonable 

preference or advantage to any 

particular person or locality, or subject 

any particular person or locality to any 

undue or unreasonable prejudice or 

disadvantage in any respect. 

Section 407 of the Act provides that 

the Secretary ‘‘may make such rules, 

regulations, and orders as may be 

necessary to carry out the provisions of 

this [Act].’’ (7 U.S.C. 228(a)) The 

Secretary has delegated the 

responsibility for administering the Act 

to AMS. Within AMS, the Packers and 

Stockyards Division (PSD) of the FairTrade 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 CFR. 

Therefore, based on the authority 

delegated to USDA by Congress to 

administer the Act, AMS is 

promulgating this rulemaking to amend 

part 201 to specifically clarify that 

discriminatory, deceptive, and 

retaliatory conduct, as defined in this 

rule, are violations of the Act. 

Executive Order (E.O.) 14036, 

‘‘Promoting Competition in the 

American Economy’’ (86 FR 36987, July 

9, 2021), directs the Secretary to further 

the vigorous implementation of the Act. 

Accordingly, this final rule addresses 

the unfair treatment of farmers and 

improves competitive conditions in 

markets. This rule adds clarity to 

USDA’s regulations concerning unjustly 

discriminatory practices, deceptive 

practices, and undue or unreasonable 

prejudices or disadvantages. E.O. 14036 

underscored that ‘‘it is unnecessary 

under the... Act to demonstrate 

industry-wide harm to establish a 

violation of the Act and that the ‘unfair, 

unjustly discriminatory, or deceptive’ 

treatment of one farmer’’ violates the 

Act. Among other policy goals in the 

E.O., this final rule is specifically 

intended to address the unfair treatment 

of farmers and make it easier for them 

to garner the full value of their animals. 

The Act is a remedial statute enacted to 

address problems faced by farmers, 

producers, and other participants in the 

markets for livestock, meats, meat food 

products, livestock products in 

unmanufactured form, poultry, and live 

poultry; to protect the public from 

predatory practices; and to help ensure 

a stable food supply. Thus, as academics 

and courts have noted, the Act has ‘‘tortlike provisions that are concerned with 

unfair practices and discrimination’’ 

that fulfill a ‘‘market facilitating 

function,’’ which Congress designed to 

prevent ‘‘market abuse.’’ 87 AMS 

interprets and implements the Act to 

achieve its core statutory purposes.88

IV. Summary of the Proposed Rule 

In the October 2022 proposal, AMS 

proposed amending 9 CFR 201 by 

adding a new subpart O, titled 

‘‘Competition and Market Integrity,’’ 

and containing §§ 201.300 through 

201.390. AMS proposed adding a 

Definitions section, § 201.302, 

containing the terms covered producer, 

livestock producer, market vulnerable 

individual, and regulated entity. 

AMS also proposed adding § 201.304, 

titled ‘‘Undue prejudices or 

disadvantages and unjust discriminatory 

practices,’’ to prohibit regulated entities 

from discriminating against a market 

vulnerable individual or a cooperative, 

detailing in proposed paragraph (a) 

types of prohibited actions. Paragraph 

(b) of the proposed regulation would 

prohibit regulated entities from 

retaliating against a covered producer 

because of the covered producer’s 

participation in a producer association, 

protected activities, including assertion 

of rights under the Act, and lawful 

communication. Proposed paragraph (b) 

also provided examples of prohibited 

retaliatory actions. Proposed paragraph 

(c) included a requirement that 

regulated entities retain records of 

compliance with paragraphs (a) and (b) 

for no less than five years from the date 

of record creation. 

AMS also proposed adding § 201.306, 

titled ‘‘Deceptive practices,’’ prohibiting 

a regulated entity from employing a 

false or misleading statement or 

omission of material information 

necessary to make a statement not false 

or misleading during contract formation, 


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89 7 CFR 15d.3; U.S. Department of Agriculture, 

‘‘Nondiscrimination in Programs or Activities 

Conducted by the United States Department of 

Agriculture,’’ 79 FR 41406, July 16, 2014. 

90Public Law 90–288. 

91See, e.g., ‘‘Comment on AMS–FTPP–21–0045: 

Inclusive Competitive and Market Integrity Under 

the Packers and Stockyards Act’’ (received Jan. 17, 

2023), available at https://www.regulations.gov/ 

comment/AMS-FTPP-21-0045-0424; ‘‘Comment on 

AMS–FTPP–21–0045: Inclusive Competitive and 

Market Integrity Under the Packers and Stockyards 

Act’’ (received Jan. 17, 2023), available at https:// 

www.regulations.gov/comment/AMS-FTPP-21-0045- 

04249; https://www.regulations.gov/comment/AMSFTPP-21-0045-0424; ‘‘Comment on AMS–FTPP–21– 

0045: Inclusive Competitive and Market Integrity 

Under the Packers and Stockyards Act’’ (received 

Jan. 17, 2023), available at https:// 

Continued 

performance, and termination. Section 

201.306 also proposed to prohibit a 

regulated entity from providing false or 

misleading information concerning a 

refusal to contract. The proposal was 

designed to prohibit regulated entities 

from specified deceptive practices in 

contracting, which are of particular 

concern because of the power of the 

regulated entities over their vertical 

contracting relationships. As stated in 

the proposal, AMS intended this 

proposed regulation to address broad 

areas of specific concern, not 

exhaustively identify all deceptive 

practices that would violate sec. 202(a) 

of the Act. 

Finally, AMS proposed adding 

§ 201.390, titled ‘‘Severability.’’ This 

provision was intended to inform 

reviewing courts that if any provision of 

subpart O was declared invalid, or if the 

applicability of any of its provisions, or 

any components of any provisions, to 

any person or circumstances was held 

invalid, the validity of the remaining 

provisions of subpart O or their 

applicability to other persons or 

circumstances would not be affected. 

Severability provisions are typical in 

modern AMS regulations. AMS 

regulations often cover several different 

topics in a subpart. This provision was 

added because the regulations in 

subpart O are designed to address 

several different types of violations 

under the Act. Because these violations 

address similar underlying 

developments in the livestock and 

poultry markets—namely, abusive 

practices facilitated by increased 

vertical integration and horizontal 

concentration—these violations were 

suitable for joining in a single 

rulemaking. However, each could be 

viewed as its own stand-alone 

rulemaking and therefore should be 

severable. 

Upon consideration of public 

comments on the proposed rule, AMS 

modified some of its proposed 

provisions to derive this final rule. 

These changes are outlined below. 

V. Changes From the Proposed Rule 

AMS is making the following changes 

to the proposed rule based on the 

agency’s analysis of the issues raised by 

commenters. 

A. Market Vulnerable Individual (MVI) 

to Prohibited Bases 

With respect to the proposed 

regulations regarding undue prejudice 

and unjust discrimination, § 201.304, 

several commenters expressed concern 

that the definition of ‘‘market vulnerable 

individual (MVI)’’ as the basis for 

prohibiting undue prejudice and 

discrimination was too broad and 

ambiguous and could lead to an 

avalanche of litigation. To simplify this 

section, the final rule uses a delineated 

set of protected bases against undue 

prejudice and discrimination that were 

discussed in the proposed rule: race, 

color, national origin, religion, sex, 

sexual orientation, gender identity, age, 

disability, and marital status. These 

delineated bases reflect the Statement of 

General Policy Under the Packers and 

Stockyards Act published by USDA in 

1968 (9 CFR 203.12(f)) and USDA’s 

Conducted Programs Statement, and 

reflect a general congressional policy as 

indicated in other statutory sources 

(discussed below).89 The final rule 

retains status as a cooperative as a 

protected basis against undue prejudice 

and discrimination, which reflects the 

principles set forth in the Agricultural 

Fair Practices Act of 1967.90 (For the 

avoidance of doubt, AMS notes that 

discrimination against a member of a 

cooperative is prohibited under the 

provisions of paragraph (b)(2)(iii).) 

Accordingly, AMS has removed the 

term market vulnerable individual from 

the list of terms defined for subpart O 

in § 201.302. 

AMS is adopting the aforementioned 

specific bases, as opposed to MVI, 

because the specific prohibited bases 

offer clearer, more workable standards 

to achieve the same goal set forth and 

specifically articulated in the proposed 

rule, but in a manner that will facilitate 

compliance by regulated entities and 

better enable producers to exercise their 

rights under the Act. As AMS explained 

in the proposed rule, the principal 

purpose of the MVI approach was to 

address prejudices in the marketplace 

against producers that are more 

vulnerable to such treatment and to stop 

unjust discrimination. AMS views 

vulnerability to adverse marketplace 

treatment to include, but not be limited 

to, exclusion or disadvantage on the 

basis of race, color, religion, national 

origin, sex (including sexual orientation 

and gender identity), disability, marital 

status, or age, or on the basis of the 

covered producer’s status as a 

cooperative. AMS initially adopted the 

MVI approach because it believed that 

the proposed rule’s flexible approach to 

resolving marketplace vulnerabilities 

offered producers protection in an everevolving market. The proposed 

approach had the advantage of being 

responsive to the particular facts of 

given cases and particular markets over 

time. 

As part of the rulemaking process, 

however, AMS sought comment on 

whether this was the best approach. 

AMS requested comment on whether it 

should ‘‘delineate specific categories of 

vulnerable producers on the basis of 

membership in groups that have 

historically been subject to adverse 

treatment owing to racial, ethnic, 

gender, or religious prejudices.’’ (87 FR 

60010, Oct. 3, 2022) AMS also sought 

comment on ‘‘whether this regulation 

should ban discrimination against 

specific classes, such as on the basis of 

race, color, national origin, religion, sex, 

sexual orientation, gender identity, age, 

disability, marital status, or family 

status. Such an approach would differ 

from the market vulnerable individual 

approach and would instead more 

closely follow the civil rights laws that 

prohibit prejudicial discrimination 

against certain protected classes.’’ 

After considering the comments on 

both the MVI approach and on specific 

delineated bases, AMS determined that 

MVI is not sufficiently clear enough to 

meet the objectives of this regulation. 

The enumeration of specific prohibited 

bases provides more clarity and 

certainty by limiting the scope of the 

rule to prohibited adverse actions 

against all producers on the basis of 

their membership of a protected class, 

in line with existing civil rights 

requirements. Commenters, such as a 

meat industry trade association, a 

poultry industry trade association, and 

a live poultry dealer, criticized the 

proposed rule’s MVI definition for being 

vague and ambiguous and potentially 

exposing their businesses to an 

unworkable standard that could 

potentially encompass a wide range of 

covered producers far beyond what the 

Agency appeared to be contemplating in 

the proposed rule. In contrast, these 

commenters indicated that an approach 

based on specific classes, such as race, 

sex, sexual orientation, or religion, 

would be clearer and would follow the 

precedent of civil rights laws already in 

place while protecting all producers.91


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16114 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

www.regulations.gov/comment/AMS-FTPP-21-0045- 

0419. 

92See, e.g., National Cattlemen’s Beef 

Association, ‘‘Comment on AMS–FTPP–21–0045: 

Inclusive Competitive and Market Integrity Under 

the Packers and Stockyards Act’’ (received Jan. 17, 

2023), available at https://www.regulations.gov/ 

comment/AMS-FTPP-21-0045-0418 (Deception, 

discrimination, or retaliation on the basis of race, 

ethnicity, sexual orientation, gender identity, 

ability, religion/spirituality, nationality and/or 

socioeconomic status is reprehensible and should 

be remediated using the appropriate legal avenues, 

including legislative changes where necessary).) 

93 9 CFR 203.12(f). 

94USDA, Discrimination Financial Assistance 

Program, ‘‘Eligibility,’’ https://22007apply.gov/ 

eligibility.html (last accessed Oct. 2023) (‘‘This 

program covers discrimination based on different 

treatment you experienced because of: Race, color, 

or national origin/ethnicity (including status as a 

member of an Indian Tribe); Sex, sexual orientation, 

or gender identity; Religion; Age; Marital status; 

Disability; Reprisal/retaliation for prior civil rights 

activity’’).’’) 

95See, generally, DOJ, Civil Rights Division. The 

Attorney General’s Annual Report to Congress on 

Fair Lending Enforcement (2021), available at 

https://www.justice.gov/d9/pages/attachments/ 

2022/11/14/ecoa_report_2021_final_0.pdf (In 2001 

to 2021, there were 496 fair lending referrals to DOJ, 

of which 163 were on the basis of race and national 

origin. Other noted referrals, and then cases, in 

2019 and 2020 were discrimination based on age 

and gender.) 

96See also Central Railroad Co. of New Jersey v. 

United States, 257 U.S. 247 (1921) (‘‘They can be 

held jointly and severally responsible for unjust 

discrimination only if each carrier has participated 

in some way in that which causes the unjust 

discrimination, as where a lower joint rate is given 

to one locality than to another similarly situated’’). 97Proposed paragraph (a)(2)(iv), which prohibited 

termination or non-renewal of a contract on a 

prohibited basis, is renumbered in the final rule as 

paragraph (a)(2)(v). 

Several meat and poultry industry 

commenters who opposed use of the 

MVI approach stressed that they do not 

engage in discrimination on the specific 

bases set forth in this final rule and 

oppose such discrimination.92

Multiple agricultural advocacy 

organizations also expressed approval of 

these protected classes as the prohibited 

bases for discrimination when 

responding to the proposed rule’s 

solicitation of responses on this issue, 

saying discrimination against 

individuals in these groups should be 

clearly recognized so those individuals 

do not have to continually prove 

discrimination and prejudice against 

them based on the characteristic that 

makes them vulnerable in the market. 

AMS agrees that the bases adopted in 

the final rule reflect genuine 

vulnerability to market exclusion and 

have no competitive benefit. 

AMS also notes that some 

commenters interpreted the MVI 

approach as potentially providing 

protection to small producers on the 

basis that small producers were 

vulnerable to discrimination in the form 

of the same kinds of adverse treatment 

proposed to be prohibited in this rule. 

While AMS is sympathetic to the plight 

of small producers’ challenges in 

accessing fair markets, AMS did not 

intend this rule to address those 

concerns (as also discussed below in 

Section VII—Comment Analysis). 

Basing the rule on a term that gave rise 

to such disparate interpretations 

underlined the necessity of utilizing the 

more specific bases set forth in the 

proposed rule’s alternative formulation. 

Additionally, AMS notes that these 

prohibited bases are now widely 

accepted standards of nondiscrimination at USDA and in the U.S. 

economy more broadly. AMS adopted 

many of these as part of its 1968 

Statement of General Policy.93 Together 

with the Agricultural Fair Practices Act 

of 1967, these bases also apply to AMS 

enforcement of the Equal Credit 

Opportunity Act (ECOA) under the Act, 

to USDA programs through its 

Conducted Programs Statement, and, 

more recently, to the terms of USDA’s 

debt relief under section 22007 of the 

Inflation Reduction Act.94 The terms are 

also widely accepted bases in other laws 

that prohibit discrimination, such as in 

housing and employment.95 The 

prohibited bases defined in the final 

rule have become so widely accepted as 

prohibited bases of discrimination that 

it would be notable and arbitrary for the 

Agency to pick some of the terms and 

not others. Quite simply, ‘‘unjust 

discrimination’’ and ‘‘undue 

prejudices’’ cannot be read but to 

include these widely accepted nondiscrimination terms. 

Accordingly, to achieve the same goal 

that the Agency set forth in the 

proposed rule through both MVI and the 

alternative formulation, AMS is now 

adopting the alternative formulation: 

race, color, religion, national origin, sex 

(including sexual orientation and 

gender identity), disability, marital 

status, or age of the covered producer; 

or because of the covered producer’s 

status as a cooperative. 

B. Prohibited Actions Taken on a 

Prejudicial Basis 

In § 201.304(a)(2), AMS made three 

changes to the provisions regarding 

prohibited actions taken on a prejudicial 

basis. First, in paragraphs (a)(2)(i) 

through (iii), AMS proposed to prohibit 

offering contracts that are less favorable 

than those generally or ordinarily 

offered, refusing to deal, and differential 

contract performance or enforcement, 

when each occurred on a prohibited 

basis. AMS is revising each of these 

provisions to provide clarity and 

uniformity across this final rule with 

respect to a comparison to similarly 

situated producers and also to ensure 

parallel language with the retaliation 

adverse actions under § 201.304(b)(3). 

Paragraph (a)(2)(i) is revised to read 

‘‘Offering contract terms that are less 

favorable than those generally or 

ordinarily offered to similarly situated 

producers; paragraph (a)(2)(ii) is revised 

to read ‘‘Refusing to deal with a covered 

producer on terms generally or 

ordinarily offered to similarly situated 

covered producers’’; and paragraph 

(a)(2)(iii) in the final rule is revised to 

read ‘‘performing under or enforcing a 

contract differently than with similarly 

situated covered producers’’ [emphasis 

added]. ‘‘Similarly situated,’’ is a phrase 

commonly used by commenters and by 

AMS in the proposed rule when 

discussing producer groups.96 Including 

this concept in the final regulation 

provides more context for a comparison 

of what differential performance or 

enforcement would look like, and 

therefore provides more specificity to 

the regulation. This revision also 

mirrors a revision made to language in 

a similar provision in the retaliation 

section (§ 201.304(b)(3)(ii) and (iv)). The 

addition of ‘‘with a covered producer’’ 

in paragraph (a)(2)(ii)—Refusal to deal, 

is similarly designed to align with the 

parallel provision for paragraph 

(b)(3)(iv) as was set out in the proposed 

rule and retained in the final rule. The 

final rule adds ‘‘on terms generally or 

ordinarily offered to similarly situated 

producers’’ as well, in response to 

comments (as discussed below) to 

provide similar clarity of application 

that refusal to deal is not simply an 

absolute boycott or making a sham or 

nominal offer, but includes failure to 

bid, negotiate, and otherwise make a 

reasonable attempt to contract on terms 

generally or ordinarily offered to 

similarly situated producers when done 

on the prohibited basis. 

Second, AMS is adding a new 

paragraph (a)(2)(iv), which prohibits— 

when it occurs on a prohibited basis— 

‘‘requiring a contract modification or 

renewal on terms less favorable than 

similarly situated covered 

producers.’’ 97 The new provision 

expands on the concept encompassed in 

paragraph (a)(2)(i), which prohibits 

‘‘offering contract terms that are less 

favorable than those generally or 

ordinarily offered to similarly situated 

covered producers.’’ The new provision 

prohibits regulated entities from making 

contract terms less favorable for 

producers once they are under contract 

and have incurred financial obligations 

because of that contract. The new 

provision mirrors a new provision 


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added to the retaliation section 

(§ 201.304(b)(3)(iii)) in response to 

public comment on the proposed 

retaliation regulations. AMS also uses a 

similar approach in the retaliation 

section on refusing to deal 

(§ 201.304(b)(3)(iv)), as requested by 

public commenters, by adding ‘‘with a 

covered producer on terms generally or 

ordinarily offered to similarly situated 

covered producers’’ after ‘‘deal,’’ for the 

same reasons—this language helps 

prevent evasion. Commenters requested 

that AMS provide more protection so 

that regulated entities cannot formulate 

new ways of harming producers in 

contracting—a crucial component of a 

producer’s financial well-being. 

Commenters suggested an additional 

provision regarding specific contract 

terms, including contract modification, 

be added to the regulations. While AMS 

did not adopt the suggested provision in 

whole, AMS recognizes the importance 

of specifically prohibiting unfavorable 

contract modifications or renewals that 

occur on a prohibited basis, considering 

the detrimental financial impact this 

can have on producers already under 

contract. In making these changes, the 

final rule provides a greater degree of 

specificity regarding the type of conduct 

the rule prohibits. AMS will review the 

facts and circumstances of each case 

and the regulated entity’s justifications 

for any modification or renewal to 

determine whether the regulated entity 

has violated this rule. 

Third, AMS is adding a new 

paragraph (a)(2)(vi), which prohibits 

regulated entities from taking ‘‘any other 

action that a reasonable covered 

producer would find materially 

adverse.’’ This provision represents a 

logical outgrowth from the proposed 

rule, which had indicated that the 

‘‘prejudice or disadvantage with respect 

to paragraph (a)(1) of this section 

includes the following actions.’’ As 

AMS explained in the proposed rule, 

AMS believes that the type of harm to 

a producer will not be difficult to 

identify when it occurs based upon the 

facts and circumstances, and thus 

provided an exemplary list to aid in 

identification and enforcement under 

the rule. Such a list was not intended to 

be all encompassing. However, in 

response to comments, AMS has 

recognized that such an open-ended 

approach may create too much 

uncertainty and undermine compliance 

and enforcement. AMS is replacing the 

use of ‘‘includes’’ with an additional, 

more flexible provision that provides a 

broader yet not unlimited range of 

possible harms. AMS’s approach is in 

response to comments that adverse 

treatment of producers by regulated 

entities can occur outside the confines 

of the contractual relationship. Such 

conduct could include, for example, 

interference by a regulated entity into 

regulatory matters of significant material 

importance to producers. Several public 

commenters wanted more producer 

protections incorporated into 

§ 201.304(a)(2). This provision provides 

a broad and flexible approach to these 

prohibitions and allows for ‘‘material’’ 

to be determined by the facts and 

circumstances of each case while 

staying within the scope of the proposed 

rule’s intent around harms to producers 

under unjust discrimination and undue 

prejudice deriving from adverse actions. 

C. Exceptions to the Prohibited Bases 

Commenters suggested that AMS 

include exceptions to the prohibition on 

undue prejudice and unjust 

discrimination. In response to these 

comments and the shift from MVI to 

identifying specific prohibited bases, 

AMS decided to provide specific 

exceptions from the prohibition in two 

circumstances. New § 201.304(a)(3) 

states that the following actions by a 

regulated entity do not prejudice, 

disadvantage, inhibit market access, or 

constitute adverse action under 

§ 201.304(a)(1): (i) fulfilling a religious 

commitment relating to livestock, meats, 

meat food products, livestock products 

in unmanufactured form, or live 

poultry; (ii) a Federally-recognized 

Tribe, including its wholly or majorityowned entities, corporations, or Tribal 

organizations, performing its Tribal 

governmental functions. 

In shifting from MVI toward specific 

prohibited bases, AMS identified the 

need to provide certain exceptions from 

the prohibition. The proposed MVI was 

a flexible standard that permitted the 

Agency to evaluate the facts and 

circumstances of a particular case and 

whether the exclusion or 

disadvantageous contracting 

arrangement was based on the 

characteristics of the producer. 

Specifying delineated prohibited bases 

provides greater clarity, yet in doing so, 

it eliminates a degree of flexibility that 

could be valuable in a small set of 

circumstances. Accordingly, the Agency 

is adopting two specific exceptions to 

recognize circumstances that do not give 

rise to unjust discrimination. AMS 

asked questions about both areas in the 

proposed rule, highlighting to 

commenters that the Agency recognized 

the potential for additional adjustments 

to be made in those areas. 

First, AMS is providing a specific 

exception to recognize the important 

role ritual slaughter plays in certain 

religious traditions and ensure that 

religiously significant meats—such as 

kosher, halal, and Amish meats—are not 

impacted by the rule’s prohibition on 

discrimination on the basis of the 

producer’s religion. According to AMS 

subject matter experts, halal 

slaughterers, for example, express a 

legitimate, religiously grounded 

preference for livestock and poultry 

raised by operators of faith, e.g., the 

Muslim or the Amish Christian group, 

that maintain particular animal 

husbandry practices. In adopting its 

prohibition on prejudice on the basis of 

religion, AMS is principally focused on 

access to the broad livestock markets for 

persons where religion has no legitimate 

business purpose. In contrast, where 

religion is relevant to the livestock and 

meat itself, AMS is not seeking to 

disturb the religiously based 

determinations in what is a relatively 

discrete market segment. Therefore, 

when administering the Act, AMS must 

allow discriminatory conduct directed 

toward fulfilling religious commitments 

surrounding livestock care and meat 

production. 

To ensure clarity in its application, 

this rule respects longstanding 

jurisprudence surrounding Tribal 

sovereignty and the political 

relationship that a Tribe has with its 

members that secures the right for Tribal 

entities to preference Tribal members. 

To ensure that it is not read in 

contradiction with existing 

jurisprudence, the rule explicitly 

specifies that Tribal governments can 

engage in practices related to livestock, 

poultry, and meats with respect to nonTribal entities or non-Tribal 

descendants. The prohibition on 

discrimination on the basis of race or 

color would be read to protect a person 

from discrimination for being of Native 

American descent, but not on 

preferential treatment given to Tribal 

members based on their political 

classification. This matter was 

specifically raised by, and is responsive 

to, Tribal governments during the Tribal 

consultation that AMS conducted and is 

described below under ‘‘VII.C.— 

Executive Order 13175—Consultation 

and Coordination with Indian Tribal 

Governments.’’ 

AMS recognizes that this rulemaking 

cannot foresee the range of unique or 

extenuating circumstances that may 

present in agricultural markets. 

Commenters stated that rapidly 

changing livestock and poultry markets 

may require an exception to the 

prohibition against undue prejudice or 

disadvantage on a protected basis. 

However, AMS did not identify, from 

the comments or based on its 


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16116 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

98 ‘‘Comment on AMS–FTPP–21–0045: Inclusive 

Competition and Market Integrity Under the 

Packers and Stockyards Act,’’ available at https:// 

www.regulations.gov/comment/AMS-FTPP-21-0045- 

0423. 

99See, e.g., U.S. Department of Justice, ‘‘Justice 

Department Files Lawsuit and Proposed Consent 

Decree to Prohibit Koch Foods from Imposing 

Unfair and Anticompetitive Termination Penalties 

in Contracts with Chicken Growers,’’ Nov. 9, 2023, 

available at https://www.justice.gov/opa/pr/justicedepartment-files-lawsuit-and-proposed-consentdecree-prohibit-koch-foods-imposing. 

experience, any other specific 

circumstances in the livestock and 

poultry industries where a prejudice 

against a producer on a prohibited basis 

was justified under the Act. To the 

extent that unforeseen circumstances 

could arise that would justify creating 

the need to allow for additional 

exceptions to this rule, AMS believes 

that those circumstances are likely to be 

rare and tailored to narrow 

circumstances. Accordingly, AMS 

believes that prosecutorial discretion 

will provide it with adequate flexibility 

to offer relief on a case-by-case basis. Of 

course, if following implementation of 

this rule it becomes evident that 

additional exceptions should exist in 

regulation, AMS may amend this 

regulation through the ordinary 

rulemaking process. 

D. Retaliation Provisions 

AMS proposed in § 201.304(b)(1) to 

prohibit retaliation against a covered 

producer that occurs because of the 

covered producer’s participation in 

protected activities ‘‘to the extent that 

these activities are not otherwise 

prohibited by Federal or state law, 

including antitrust laws.’’ In the final 

rule, AMS modified the language of this 

provision to move the exception for 

Federal or State law, including antitrust 

laws, to paragraph (b)(2) and to add 

Tribal law to the types of law identified 

in this exception. AMS is adding this 

language to make explicit the 

applicability of Tribal law in this 

circumstance. Additionally, AMS 

changed ‘‘because of’’ to ‘‘based upon’’ 

both in response to comments and to 

align with its approach in § 201.304(a) 

and embodied in § 201.304(c). AMS 

proposed ‘‘based upon’’ in § 201.304(a) 

and ‘‘by employing’’ in § 201.304(c) to 

capture actions where the prohibited 

bases form a material part of the 

action—discrimination or prejudice, or 

as part of the deceptive practice. Section 

201.304(b) is designed to achieve the 

same goal. AMS also received comments 

recommending broad protections for 

covered producers from retaliatory 

actions, including where the retaliation 

was a part of the decision to take an 

adverse action. AMS further 

underscores that ‘‘based upon the 

covered producer’s participation in an 

activity . . .’’ covers threats that would 

reasonably dissuade or chill a covered 

producer from participating in the 

activities. 

Under proposed § 201.304(b)(2)(i), 

AMS proposed to establish as a 

protected activity a producer’s 

communication with a government 

agency on matters related to livestock, 

meats, or live poultry or petitions for 

redress of grievances before a court, 

legislature, or government agency. 

Commenters requested that AMS clarify 

that this protection covers 

communication with any sector or level 

of government, including State 

governments. AMS intends for this 

regulation to include protections for 

communications with any level of 

government, including any government 

committee or official. In this final rule, 

AMS is aligning the use of the terms 

‘‘court, legislature, or government 

agency’’ and simplifying the language to 

say, ‘‘government entity or official.’’ 

This change ensures that protected 

communications may occur with any of 

the three branches of government, any 

level of government, and with 

individual government officials, 

including committees and members of a 

legislature. 

AMS requested public comment on 

whether the final rule should protect 

producers who choose not to participate 

in protected activities. In response to 

public comment supporting this 

proposal, AMS has revised 

§ 201.304(b)(2)(ii) to protect a 

producer’s right to refuse a regulated 

entity’s request to engage in 

communication with a government 

entity or official that is not required by 

law, and § 201.304(b)(2)(iii) to protect a 

producer’s right to form or join, or to 

refuse to form or join, a producer or 

grower association or organization. 

Proposed § 201.304(b)(2)(ii), which 

protected a producer’s assertion of any 

of the rights granted under the Act or 

this part, or assertion of contract rights, 

is renumbered as paragraph (b)(2)(vii) in 

the final rule. 

AMS proposed in § 201.304(b)(2)(v) to 

protect producer communication or 

negotiation with a regulated entity for 

the purpose of exploring a business 

relationship. In response to public 

comment, AMS added in the final rule 

protection for communicating; 

negotiating; or contracting with a 

regulated entity, another covered 

producer, or with a commercial entity or 

consultant; for the purposes of exploring 

or entering into a business relationship. 

Commenters asserted that, as proposed, 

the protected activity was 

‘‘unreasonably narrow’’ and that 

expanding this protection would ‘‘help 

ensure that covered producers may 

explore all their business 

opportunities.’’ 98 The Act is intended to 

ensure an inclusive market to protect 

and promote the ability for covered 

producers to compete.99 Such 

competition may also take the form of 

exploring or entering into opportunities 

for enhanced price discovery through 

market intermediaries, such as listing 

cattle for competitive bidding on a 

publicly transparent exchange or selling 

at an auction barn or through a 

cooperative or other commercial entity 

that facilitates the marketing of livestock 

by the covered producer. The provision 

covers both the ability to negotiate or 

contract with the commercial entity or 

consultant serving as an intermediary or 

other facilitating the marketing or 

platform for marketing, such as the 

exchange or auction barn; and also the 

ability to negotiate or contract with 

other packers during the exchange or 

auction process. This is protected 

because both elements may be necessary 

parts of securing those opportunities to 

engage in price discovery and enhance 

the choice and competitive 

opportunities for covered producers to 

earn the full market value of their goods 

and services. The provision also covers 

consideration of alternative uses for 

farm property. As with all protected 

activities under this final rule, the 

regulated entity may not present an 

obstacle to engaging in these activities, 

whether written in a contract, verbally 

asserted, or otherwise, as those are 

impermissible under the Act. 

Under proposed § 201.304(b)(3), AMS 

identified types of prohibited retaliatory 

conduct. Commenters expressed 

concern regarding the lack of clarity of 

these proposed prohibitions, with some 

saying the prohibitions were too broad, 

some arguing that the rule should 

provide even more flexibility, and some 

supporting the introduction of a ‘‘catchall clause’’ to provide additional 

protection against retaliatory behavior. 

The final rule adds language to 

paragraph (b)(3)(ii) to prohibit 

performing under or enforcing a 

contract differently than with similarly 

situated producers [emphasis added]. 

This language, ‘‘similarly situated,’’ was 

commonly used by commenters and 

AMS in the proposed rule when 

discussing producer groups. The 

addition of ‘‘similarly situated’’ 

language provides greater specificity 

regarding the scope of the regulation by 

providing more context for a 

comparison of what differential 


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100Proposed paragraphs (b)(3)(iii) and (iv) are 

accordingly renumbered as paragraphs (b)(3)(iv) 

and (v) in the final rule. 

performance or enforcement would look 

like. 

The final rule also revises the 

provision prohibiting a regulated entity 

from refusing to deal with a covered 

producer by adding the language, ‘‘on 

terms generally or ordinarily offered to 

similarly situated covered producers’’ 

(paragraph (b)(3)(iv) in the final rule). In 

response to comments, AMS agrees that 

the rule as proposed provided too great 

a latitude for a regulated entity to 

engage in retaliation because a regulated 

entity could, for example, satisfy the 

proposed rule by simply offering highly 

unfavorable terms to the covered 

producer. AMS believes that this 

revision provides broader coverage 

regarding the most common 

circumstances that producers may 

encounter in their business dealings in 

which regulated entities may attempt to 

exact retaliation. It would also cover 

circumstances where the ‘‘similarly 

situated producer’’ was the covered 

producer’s own prior status quo 

circumstance with the regulated entity 

before the covered producer engaged in 

the protected activity. AMS is also 

aligning refusal to deal under paragraph 

(a)(2)(ii) to address the similar risk of 

evasion. 

Similarly, commenters requested that 

AMS add a regulation regarding contract 

modification, or contract renewal. AMS 

has amended proposed § 201.304(b)(3) 

to add a new paragraph (b)(3)(iii) to 

clarify that requiring a contract 

modification or a renewal on terms less 

favorable than for similarly situated 

producers is covered.100 This provision 

covers any adverse change to the 

covered producer’s contract terms if 

they are done in retaliation to a 

producer’s engaging in protected 

activities. Additionally, in response to 

comments requesting AMS clarify that 

prohibited adverse actions ‘‘includes 

but is not limited to’’ the list in 

proposed § 201.304(b)(3), AMS has 

added a new paragraph (b)(3)(vi) to 

prohibit ‘‘any other action that a 

reasonable covered producer would find 

materially adverse.’’ AMS designed this 

rule to protect producers broadly from 

adverse actions based upon the rule’s 

prohibitions. The regulatory text of the 

proposed rule set forth an exemplary 

list, specifically denoting that 

‘‘retaliation includes the following 

actions’’ (paragraph (b)(2). Several 

public commenters wanted more 

producer protections, such as 

discriminatory conduct against 

producers by regulated entities through 

means outside of contractual devices. 

AMS agrees that adverse, retaliatory 

treatment of producers by regulated 

entities can occur through a wide range 

of means, including outside the confines 

of contractual devices, or through 

contractual means that are not easily 

delineated in a specific list. Such 

conduct could, for example, include 

interference by a regulated entity into 

regulatory matters of significant material 

importance to producers. Based on 

AMS’s regulatory experience, regulated 

entities may interfere in covered 

producers’ water rights, which are 

exemplary of harms that would be 

considered retaliation even if they occur 

outside the confines of contractual 

relationships. Or, conduct could include 

retaliation during the contracting 

process for protected activities that 

occurred prior to the covered producer’s 

attempt to form a business relationship 

with the regulated entity. Such 

examples might not be clearly covered 

under §§ 201.304(b)(3)(i) through (v) of 

the proposed rule’s protections relating 

to contracts but were covered within the 

scope of the proposed rule’s intent 

around broad-ranging adverse actions 

that harm producers. AMS also intends 

the list of retaliatory activities to be 

broad enough to capture the fullest 

range of materially adverse harms 

encompassed under unjust 

discrimination and undue prejudice— 

including in comparison to either their 

prior circumstances or to similarly 

situated producers—and threats of such 

harms that are designed to deter or 

punish producers from participating in 

the activities protected by this final rule. 

Therefore, § 201.304 (b)(3)(vi) has been 

added to the final rule to cover other 

types of adverse treatment. This 

provision provides a broad and flexible 

approach to these prohibitions and 

allows for ‘‘material’’ to be determined 

by the facts and circumstances of each 

case. 

In making these changes, the final 

rule provides a greater degree of 

specificity regarding the type of conduct 

the rule prohibits. AMS is not, however, 

providing the degree of specificity 

requested by commenters regarding 

unfavorable contract terms because it is 

impractical to name every action a 

malicious actor could use to retaliate 

against a producer, and providing this 

level of detail is not necessary to enforce 

the rule. 

E. Technical Changes 

AMS made editorial changes to the 

text of several proposed regulations to 

improve clarity and readability. For 

instance, in the definition of livestock 

producer, AMS revised the proposed 

definition by removing multiple 

prepositions, so that the definition in 

the final rule reads more simply: from 

‘‘Livestock producer means any person 

engaged in the raising and caring for 

livestock by the producer or another 

person, whether the livestock is owned 

by the producer or by another person, 

but not an employee of the owner of the 

livestock’’ to ‘‘Livestock producer means 

any person, except an employee of the 

livestock owner, engaged in the raising 

of and caring for livestock.’’ 

Additionally, AMS revised the syntax of 

several proposed regulations. For 

example, in § 201.304(b)(3)(i), which 

lists prohibited retaliatory actions, AMS 

revised the phrasing of the prohibition 

from ‘‘Termination of contracts or nonrenewal of contracts’’ to ‘‘Terminating 

or not renewing a contract’’ to place 

emphasis on the action being prohibited 

rather than the subject of that action. 

AMS also made several nonsubstantive clarifying changes to the 

wording of prohibited contractual 

deceptive practices in paragraphs (b) 

and (c) of § 201.306—Deceptive 

practices. These changes are identical 

under contract formation, performance, 

and termination and include the 

removal of the phrase ‘‘pretext’’ and 

‘‘fact’’ and the inclusion of the term 

‘‘information’’ in place of ‘‘fact.’’ The 

term ‘‘pretext’’ was removed because it 

is not needed to accomplish the 

objectives of § 201.306. The conduct this 

rule aims to prohibit is more directly 

defined through use of the following 

language: ‘‘false or misleading statement 

or representation, or omission of 

material information.’’ By changing the 

term ‘‘fact’’ to ‘‘information’’ certain 

conduct that may not be considered or 

defined as ‘‘factual’’ under the Act, yet 

is still deceptive, will be covered. 

Lastly, AMS made a technical change 

to the table of contents for subpart O. To 

avoid confusion, AMS is including 

§§ 201.303 and 201.305 in the table of 

contents as reserved sections to indicate 

the gaps between §§ 201.302, 304, and 

306 are deliberate and that sections have 

not been inadvertently omitted. 

VI. Provisions of the Final Rule 

Under the authority of the Act, this 

rule adds a new subpart O to AMS’s 

regulations in 9 CFR 201, titled 

‘‘Competition and Market Integrity,’’ 

and consisting of §§ 201.300 through 

201.390. This section summarizes the 

substantive provisions of the new 

subpart. 

A. Definitions (§ 201.302) 

Section 201.302 defines three terms 

for subpart O: covered producer, 

livestock producer, and regulated entity. 


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101See 7 U.S.C. 193. C.f. Mitchell v. United 

States, 313 U.S. 80, 94 (1941). 

102 313 U.S. at 94. 

103 Id. at 94. 

104 Id. at 95 (emphasis added). 

A covered producer is defined as a 

livestock producer (as defined in 

§ 201.302) or swine production contract 

grower or poultry grower as defined in 

section 2(a) of the P&S Act (7 U.S.C. 

182(8), (14)). Under section 2(a) of the 

Act, swine production contract grower 

means any person engaged in the 

business of raising and caring for swine 

in accordance with the instructions of 

another person. A live poultry grower is 

defined under section 2(a) of the Act as 

any person engaged in the business of 

raising and caring for live poultry for 

slaughter by another, whether the 

poultry is owned by such person or by 

another, but not an employee of the 

owner of such poultry. AMS is adopting 

this definition to facilitate a focus in 

this rule on protecting livestock 

producers (and other parties included in 

the definition of covered producer) 

because the harms of discrimination, 

retaliation, and deception that are 

addressed in this rule are directed 

toward and experienced by those 

persons. Therefore, even though the Act 

does not contain a definition for 

livestock producers, AMS has included 

livestock producers under the definition 

of covered producer; and provided a 

definition for the term livestock 

producer in this section. 

Livestock producer is defined for the 

purposes of subpart O as being any 

person, except an employee of the 

livestock owner, engaged in the raising 

of and caring for livestock. AMS aligned 

its definition of the term livestock 

producer with phrasing used in the Act 

for the terms poultry grower and swine 

production contract grower. In response 

to comment to the proposed rule, AMS 

revised its definition by removing 

unnecessary and potentially confusing 

phrasing. Employees are specifically 

excluded as they typically lack direct 

financial interest in the livestock 

themselves. 

AMS defines regulated entity as a 

swine contractor or live poultry dealer 

as defined in section 2(a) of the Act (7 

U.S.C. 182(8)) or a packer as defined in 

section 201 of the Act (7 U.S.C. 191). A 

swine contractor is defined in the Act as 

any person engaged in the business of 

obtaining swine under a swine 

production contract for the purpose of 

slaughtering the swine or selling the 

swine for slaughter, if (a) the swine is 

obtained by the person in commerce or 

(b) the swine (including products from 

the swine) obtained by the person is 

sold or shipped in commerce. Live 

poultry dealers, the vast majority of 

whom are organized in a vertical 

structure with common ownership 

interest in inputs, often referred to as 

poultry integrators, are defined in the 

Act as any person engaged in the 

business of obtaining live poultry by 

purchase or under a poultry growing 

arrangement for the purpose of either 

slaughtering it or selling it for slaughter 

by another, if poultry is obtained by 

such person in commerce, or if poultry 

obtained by such person is sold or 

shipped in commerce, or if poultry 

products from poultry obtained by such 

person are sold or shipped in 

commerce. A packer is defined in the 

Act as any person engaged in the 

business (a) of buying livestock in 

commerce for purposes of slaughter; or 

(b) of manufacturing or preparing meats 

or meat food products for sale or 

shipment in commerce; or (c) of 

marketing meats, meat food products, or 

livestock products in an 

unmanufactured form acting as a 

wholesale broker, dealer, or distributor 

in commerce. 

B. Undue Prejudice and Unjust 

Discrimination (§ 201.304(a)) 

Section 201.304(a) addresses the 

unique and often difficult to prove 

discriminatory conduct that has long 

existed in the agricultural sector by 

prohibiting specific bases of prejudicial 

action. Paragraph (a) also lists 

prohibited actions taken on a prejudicial 

basis and provides clarification on the 

types of actions that do not constitute 

prohibited action taken on a prejudicial 

basis. In doing so, AMS is clarifying the 

application of the Act, better 

empowering producers to protect 

themselves, and encouraging companies 

to adopt more robust compliance 

practices to snuff out conduct 

prohibited by the Act in its incipiency, 

before it can distort markets in the 

aggregate. In particular, this rule 

addresses the longstanding and often 

difficult to counter forms of exclusion 

that have plagued the agricultural sector 

for decades. AMS intends for this rule 

to support positive trends toward 

inclusivity in the marketplace. 

Prejudices and disadvantages based 

upon the producer’s protected 

characteristics or status as a producers’ 

cooperative have no place in today’s 

modern agricultural markets. 

The Act, through section 202(a) and 

(b), broadly prohibits certain practices 

or devices, including undue or 

unreasonable prejudices and 

disadvantages and unjust 

discrimination. Section 202(a) and (b) of 

the Act identifies several prohibited 

actions with respect to livestock, meats, 

meat food products, or livestock 

products in unmanufactured form, or for 

any live poultry dealer with respect to 

live poultry. In this rule, AMS is 

prohibiting specific undue and 

unreasonable prejudices and 

disadvantages, and unjust 

discrimination against any covered 

producer on the basis of certain 

categories of characteristics or attributes 

broadly and firmly established as unjust 

in a modern economy. This regulatory 

action implements Congress’s intent, 

expressed through the Act, to stop 

unjust discrimination and undue 

prejudice by packers and live poultry 

dealers against livestock producers and 

poultry growers. 

In enacting the Act, Congress cast a 

wide net to capture all acts of unjust 

discrimination and undue or 

unreasonable prejudice against any 

particular person. There is no indication 

that Congress intended to exempt any 

discriminatory conduct taken by 

regulated entities against producers 

covered under the Act.101 The Act’s 

prohibition of unjustly discriminatory 

or unreasonably prejudicial actions 

against a particular person was not a 

new statutory concept, as the Interstate 

Commerce Act of 1887 (or ICA) also 

banned unreasonable prejudices and 

unjust discriminatory practices well 

before the enactment of the Act. While 

the ICA does not define the scope of the 

Act, the comparison is nevertheless 

useful, especially with respect to the 

structure and design of provisions 

governing undue prejudices. A 

comparison is provided in Table 4 

below. 

In Mitchell v. United States,102 the 

Supreme Court of the United States held 

that the ICA prohibited discrimination 

based on race; such discrimination was 

‘‘essentially unjust.’’ The Court held 

that ‘‘it is apparent from the legislative 

history of the ICA that not only was the 

evil of discrimination the principal 

thing aimed at, but that there is no basis 

for the contention that Congress 

intended to exempt any discriminatory 

action or practice of interstate carriers 

affecting interstate commerce which it 

had authority to reach.’’ 103 Further, the 

Court isolated a section of the ICA and 

noted that, ‘‘Paragraph 1 of Section 3 of 

the Act says explicitly that it shall be 

unlawful for any common carrier 

subject to the Act ‘to subject any 

particular person to any undue or 

unreasonable prejudice or disadvantage 

in any respect whatsoever.’ ’’ 104 The 

Court found that unreasonable prejudice 

against an individual based on race was 

a violation and concluded that, ‘‘the 

Interstate Commerce Act expressly 


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105 Id. at 97. 106For more on the relationship between the 

Interstate Commerce Act and the Act in this area, 

see Michael Kades, ‘‘Protecting Livestock Producers 

and Chicken Growers,’’ Washington Center for 

Equitable Growth, at 66 (May 2022) discussing 

Wheeler v. Pilgrim’s Pride Corp., 591 F.3d 355, 368– 

369 (5th Cir 2009) (en banc) (J. Jones concurring): 

‘‘In all the cases discussed by the concurrence 

dealing with both terms [under the ICA], the 

defendant faced charges that it treated customers 

differently. According to the court, ‘railway 

companies are only bound to give the same terms 

to all persons alike under the same conditions.’ If 

the conditions are different, then different treatment 

is merited. Further, ‘competition between rival 

routes is one of the matters which may lawfully be 

considered in making rates.’ Differential treatment 

driven by competitive forces is not a violation. 

Acknowledging that competition can justify 

differential treatment of customers is different than 

requiring the plaintiff to prove anticompetitive 

harm to establish a violation.’’ 

107Bolded text highlights where the ICC and Act 

use similar language. Italicized text identifies areas 

where the language of both statutes is the same. 

extends its prohibitions to the 

subjecting of ‘any particular person’ to 

unreasonable discriminations.’’ 105

The Act contains similar, but broader, 

language than sec. 3 of the ICA. Section 

202 of the Act reads, ‘‘It shall be 

unlawful for any packer or swine 

contractor with respect to livestock, 

meats, meat food products, or livestock 

products in unmanufactured form, or for 

any live poultry dealer with respect to 

live poultry, to: (a) Engage in or use any 

unfair, unjustly discriminatory, or 

deceptive practice or device; or (b) Make 

or give any undue or unreasonable 

preference or advantage to any 

particular person or locality in any 

respect, or subject any particular person 

or locality to any undue or 

unreasonable prejudice or disadvantage 

in any respect . . .’’ [emphasis added]. 

Table 4 illustrates where the text 

between the two acts is similar, and also 

how the Act is broader.106

As shown in Table 4, unlike the ICA, 

the Act in secs. 202(a) and (b) prohibits 

undue or unreasonable prejudices or 

disadvantages as well as deception or 

unjust discrimination (without 

limitation to discrimination in rates and 

charges in particular). In this 

rulemaking, AMS applies the language 

from sec. 202 to prohibit acts of 

unreasonable prejudice and to prevent 

unjust discrimination including, but not 

limited to, the race discrimination that 

the Court found to be violative of the 

ICA in Mitchell. 

This rule sets forth specific 

prohibitions on prejudicial or 

discriminatory acts or practices against 

individuals that are sufficient to 

demonstrate violation of the Act 

without the need to further establish 

broad-based, market-wide prejudicial or 

discriminatory outcomes or harms. The 

prohibitions in this rule on regulated 

entities adversely treating individual 

producers address the types of harms 

the Act is intended to prevent. AMS 

finds that adverse acts on these bases 

are essentially unjust and unduly 

prejudicial, and actionable at the 

individual level. Moreover, AMS 


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Table 4: Comparison of the Interstate Commerce Act and the Packers & 

Stockyards Act107 

Interstate Commerce Act (1887 text), 

Section 3 

That it shall be unlawful for any 

common carrier subject to the provisions 

of this act to make or give any undue or 

unreasonable preference or advantage 

to any particular person, company, firm, 

corporation, or locality, or any particular 

description of traffic, in any respect 

whatsoever, 

or to subject any particular person, 

company, firm, corporation, or locality, 

or any particular description of traffic, to 

any undue or unreasonable prejudice 

or disadvantage in any respect 

whatsoever. 

Every common carrier subject to the 

provisions of this act... shall not 

discriminate in their rates and charges 

between such connecting lines[.] 

( emphasis added) 

Act, Section 202 (7 U.S.C.192), Unlawful 

practices enumerated 

It shall be unlawful for any packer or 

swine contractor with respect to livestock, 

meats, meat food products, or livestock 

products in unmanufactured form, or for 

any live poultry dealer with respect to live 

poultry, to: 

(a) Engage in or use any unfair, 

unjustly discriminatory, or deceptive 

practice or device; or 

(b) Make or give any undue or 

unreasonable preference or advantage to 

any particular person or locality in any 

respect, or subject any particular person 

or locality to any undue or unreasonable 

prejudice or disadvantage in any 

respect; ( emphasis added) 
16120 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

108 ‘‘[T]he purpose of the Act is to halt unfair 

trade practices in their incipiency, before harm has 

been suffered.’’ See Farrow v. U.S. Dep’t of Agr., 

760 F.2d 211, 215 (8th Cir. 1985) (citing De Jong 

Packing Co. v. U.S. Dep’t of Agric., 618 F.2d 1329, 

1336–37 (9th Cir. 1980); Swift & Co. v. United 

States, 393 F.2d 247, 252 (7th Cir. 1968); Armour 

and Company v. United States, 402 F.2d 712, 723 

n. 12 (7th Cir.1968). 

109Statement of General Policy Under the Packers 

and Stockyards Act. U.S. Department of 

Agriculture: Washington, DC, 1968. 

110https://www.federalregister.gov/documents/ 

2014/07/16/2014-16325/nondiscrimination-inprograms-or-activities-conducted-by-the-unitedstates-department-of-agriculture (See 29 FR 16966, 

creating 7 CFR part 15, subpart b, referring to 

nondiscrimination in direct USDA programs and 

activities, now found at 7 CFR part 15d). (assessed 

01–30–2024) 

111https://www.federalregister.gov/documents/ 

2014/07/16/2014-16325/nondiscrimination-inprograms-or-activities-conducted-by-the-unitedstates-department-of-agriculture (assessed 01/30/ 

2024) 

112 7 CFR 15d.3; U.S. Department of Agriculture, 

‘‘Nondiscrimination in Programs or Activities 

Conducted by the United States Department of 

Agriculture,’’ 79 FR 41406, July 16, 2014, available 

at https://www.federalregister.gov/documents/2014/ 

07/16/2014-16325/nondiscrimination-in-programsor-activities-conducted-by-the-united-statesdepartment-of-agriculture (last accessed 8/9/2022). 

113USDA. 2014. 7 CFR part 15d RIN 0503–AA52 

Nondiscrimination in Programs or Activities 

Conducted by the United States Department of 

Agriculture, p. 41407. 2014–16325.pdf (govinfo.gov) 

(assessed 02/01/2024). 

114For background, see Congressional Research 

Service, Defining a Socially Disadvantaged Farmer 

or Rancher (SDFR): In Brief (March 19, 2021), 

available at https://crsreports.congress.gov/product/ 

pdf/R/R46727/6. 

115See, e.g., Native American Business 

Development Act, 25 U.S.C. 4301(a). 

believes that preventing broad-based 

exclusion, and therefore promoting 

competitive markets, is most effectively 

enforced at the individual producer 

level when the conduct is in its 

incipiency.108 To further allow for 

effective enforcement of the statute, 

AMS is also including a recordkeeping 

requirement to support evaluation of 

regulated entity compliance. 

In determining the bases for 

protection against discrimination under 

the Act, AMS drew insight initially from 

the Statement of General Policy Under 

the Packers and Stockyards Act 

published by the Secretary in 1968 

(Statement of General Policy) (9 CFR 

203.12(a)), which states that the Act 

provides that all stockyard services 

furnished at a stockyard ‘‘shall be 

reasonable and nondiscriminatory and 

stockyard services which are furnished 

shall not be refused on any basis that is 

unreasonable or unjustly 

discriminatory.’’ 109 Additionally, AMS 

interprets the Act consistently with the 

regulations governing USDA-conducted 

programs; ECOA, which is enforced in 

part by AMS under the Act; a series of 

statutes identifying producers that 

Congress has determined face special 

disadvantages, are underserved, or are 

otherwise more vulnerable to 

prejudices; and the Agricultural Fair 

Practices Act (AFPA) of 1967. 

The Statement of General Policy 

reflects the current USDA policy on the 

enforcement of the Act. The Statement 

of General Policy provides in part that 

it is a violation of secs. 304, 307, and 

312(a) of the Act for a stockyard owner 

or market agency to discriminate, in the 

furnishing of stockyard services or 

facilities or in establishing rules or 

regulations at the stockyard, because of 

race, religion, color, or national origin of 

those persons using the stockyard 

services or facilities. Such services and 

facilities include, but are not limited to, 

the restaurant, restrooms, drinking 

fountains, lounge accommodations, 

those furnished for the selling, 

weighing, or other handling of the 

livestock, and facilities for observing 

such services. 

While this part of the Statement of 

General Policy applies to violations of 

secs. 304, 307, and 312(a) of the Act 

(related to the provision of services and 

facilities at stockyards on an 

unreasonable and discriminatory basis), 

almost identical prohibitive language is 

used in sec. 202 of the Act. Section 202 

pertains to packers, swine contractors, 

and live poultry dealers. Section 202(a) 

of the Act prohibits any unjustly 

discriminatory practice or device with 

respect to livestock, meats, meat food 

products or livestock products in 

manufactured form, or live poultry. 

AMS also considered USDA’s general 

regulatory prohibition against 

discrimination in USDA programs, 

which governs how USDA provides 

services to producers. In 1964, USDA 

prohibited discrimination on the basis 

of race, color, and national origin in its 

Federally conducted activities by 

adopting Title VI principles.110 USDA 

then expanded the protected bases for 

its conducted programs to include 

religion, sex, age, marital status, familial 

status, sexual orientation, disability, and 

whether any portion of a person’s 

income is derived from public 

assistance programs.111 Most recently 

updated in 2014, the general regulatory 

prohibition offers a more current 

interpretation of antidiscrimination 

standards.112 The 2014 rule aimed to 

‘‘strengthen USDA’s ability to ensure 

that all USDA customers receive fair 

and consistent treatment, and align the 

regulations with USDA’s civil rights 

goals.’’ 113 The relevant provision 

provides that no agency, officer, or 

employee of the USDA shall, on the 

grounds of race, color, national origin, 

religion, sex, sexual orientation, 

disability, age, marital status, family/ 

parental status, income derived from a 

public assistance program, political 

beliefs, or gender identity, exclude from 

participation in, deny the benefits of, or 

subject to discrimination any person in 

the United States under any program or 

activity conducted by the USDA. In that 

rulemaking, USDA identified areas 

where discrimination against a producer 

is an unacceptable denial of access to 

USDA’s services. This prior rulemaking 

provides a helpful reference to what 

constitutes unjust discrimination under 

the Packers and Stockyards Act. 

AMS interprets the Act in light of 

legislative mandates that emerged over 

the last 30 years directing USDA to 

make extra efforts to ensure that 

members of the aforementioned groups 

have equal access to USDA’s services 

and agricultural markets generally.114

Congress adopted numerous statutes 

seeking to remedy market exclusion on 

the basis of prejudices across a wide 

range of areas, including: 7 U.S.C. 8711 

(base acres); 7 U.S.C. 2003 (target 

participation rates); 7 U.S.C. 7333 

(Administration and operation of 

noninsured crop assistance program); 7 

U.S.C. 1932 (Assistance for rural 

entities); 16 U.S.C. 2202a, 3801, 3835, 

3839aa–2, 3841, and 3844 

(conservation); 7 U.S.C. 8111 (Biomass 

Crop Assistance Program); 7 U.S.C. 1508 

(Federal crop insurance, covering 

underserved producers defined as new, 

beginning, and socially disadvantaged 

farmers or ranchers and including 

members of an Indian Tribe); and 16 

U.S.C. 3871e(d) (conservation, covering 

historically underserved producers 

defined as being veteran, socially 

disadvantaged, and limited-resource 

farmers and ranchers). In 25 U.S.C. 

4301(a) and elsewhere, Congress has 

clearly expressed its intent for the 

United States Government to encourage 

and foster Tribal commerce and 

economic development.115

The definitions and coverage in these 

statutes vary to some extent. Some focus 

principally on members of groups that 

have experienced racial or ethnic 

prejudices, while others address gender 

prejudices. Overall, these statutes and 

Congressional deliberations provide 

useful reference for USDA to most 

effectively carry out the Act, which 

outlaws undue prejudice against any 

person in any respect. For example, in 

the congressional hearings preceding 

the Act’s passage, opposing members 

argued against the Act because 

producers were already protected by the 

ICA, which guaranteed ‘‘equal rights on 

the railroads to every man, woman and 


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Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 16121 

116See e.g., 61 Cong. Rec. H1872 (1921). 

117Section 22007 of the Inflation Reduction Act 

(Pub. L. 117–169). USDA implementation available 

at https://22007apply.gov/. This program covers 

discrimination based on different treatment an 

individual experienced because of race, color, or 

national origin/ethnicity (including status as a 

member of an Indian Tribe); sex, sexual orientation, 

or gender identity; religion; age; marital status; 

disability; reprisal/retaliation for prior civil rights 

activity. 

118 15 U.S.C. 1691(a). 

119 15 U.S.C. 1691c. 

120 7 U.S.C. 2301 et seq. 

121Nat’l Broiler Mktg. Ass’n v. United States, 436 

U.S. 816, 825–26 (1978) (‘‘Farmers were perceived 

to be in a particularly harsh economic position. 

They were subject to the vagaries of market 

conditions that plague agriculture generally, and 

they had no means individually of responding to 

those conditions. Often the farmer had little choice 

about who his buyer would be and when he would 

sell. A large portion of an entire year’s labor 

devoted to the production of a crop could be lost 

if the farmer were forced to bring his harvest to 

market at an unfavorable time. Few farmers, 

however, so long as they could act only 

individually, had sufficient economic power to wait 

out an unfavorable situation. Farmers were seen as 

being caught in the hands of processors and 

distributors who, because of their position in the 

market and their relative economic strength, were 

able to take from the farmer a good share of 

whatever profits might be available from 

agricultural production. By allowing farmers to join 

together in cooperatives, Congress hoped to bolster 

their market strength and to improve their ability 

to weather adverse economic periods and to deal 

with processors and distributors.’’). 

122 7 U.S.C. 182(1). 

123H.Rep. No. 85–1048, 1957. 

124 15 U.S.C. 1691c(a)(5) (‘‘(a) Enforcing Agencies. 

Subject to subtitle B of the Consumer Protection 

Financial Protection Act of 2010withthe 

requirements imposed under this subchapter shall 

be enforced under:. . . (5) The Packers and 

Stockyards Act, 1921 [7 U.S.C. 181 et seq.] (except 

as provided in section 406 of that Act [7 U.S.C. 226, 

227]), by the Secretary of Agriculture with respect 

to any activities subject to that Act.’’) 

125Michael Kades, ‘‘Protecting Livestock 

Producers and Chicken Growers,’’ Washington 

Center for Equitable Growth (May 5, 2022), 

available at https://equitablegrowth.org/researchpaper/protecting-livestock-producers-and-chickengrowers/. 

126U.S. Equal Employment Opportunity 

Commission (EEOC), No date, Facts about Race/ 

Color Discrimination, available at https://

www.eeoc.gov/fact-sheet/facts-about-racecolordiscrimination. 

127U.S. Equal Employment Opportunity 

Commission (EEOC), National Origin 

Discrimination, available at https://www.eeoc.gov/

national-origin-discrimination. 

128 Ibid. 

129U.S, Equal Employment Opportunity 

Commission (EEOC), Religious Discrimination, 

available at https://www.eeoc.gov/religiousdiscrimination. 

130U.S, Equal Employment Opportunity 

Commission (EEOC), Sex, available at https://

www.eeoc.gov/youth/sexdiscrimination#:∼:text=EEOC%20enforces

%20two%20laws%20that,sexual

%20orientation%2C%20

and%20gender%20identity. 

child,’’ and the ‘‘enforcement of the 

antitrust act . . . give[s] every man a fair 

show.’’ 116 Most recently, Congress 

provided partial compensation for 

producers who suffered discrimination 

in USDA’s programs, which USDA 

implemented on a set of protected bases 

similar to that in this final regulation.117

Additionally, in crafting the final rule, 

AMS was informed by the provisions of 

two additional laws that fall under the 

enforcement of USDA with respect to 

livestock and poultry. The first is ECOA. 

ECOA prohibits a creditor from 

discriminating in the provision of credit 

on the basis of race, color, religion, 

national origin, sex (which includes 

sexual orientation and gender identity), 

marital status, or age, because the 

applicant’s income derives all or in part 

from a public assistance program, or 

because the applicant has in good faith 

exercised any right under ECOA.118 The 

Secretary enforces ECOA under the Act, 

with respect to activities under the 

jurisdiction of the Act.119

Secondly, AFPA protects producers 

from retaliation by certain market 

intermediaries, defined as handlers, for 

being members of a cooperative or 

seeking to form a cooperative.120 The 

Secretary has delegated enforcement of 

the AFPA to AMS, which implements 

the law through the Packers and 

Stockyards Division. Congress has long 

protected the rights of agricultural 

cooperatives, acknowledging their 

important role in helping farmers meet 

the economic demands of the market. 

One year after the passage of the Act, 

Congress passed the Capper-Volstead 

Act (Pub. L. 67–146), which permits 

producer cooperatives to collectively 

process, prepare for market, handle, and 

market their products. In a decision 

related to an antitrust action against a 

nonprofit cooperative association whose 

members were involved in production 

and marketing of broiler chickens, the 

Supreme Court noted that farmers faced 

special challenges in the agricultural 

market and, therefore, cooperatives are 

afforded legal protections in helping 

them address those challenges.121

AFPA provides enhanced protections 

to those seeking to form a cooperative. 

In particular, that statute prevents 

handlers from performing certain types 

of pricing and contract discrimination, 

coercion, and other practices that 

undermine cooperatives. As noted 

previously, the Act intended to improve 

the agricultural market and includes 

associations in the definition of 

‘‘person’’ when referred to in the Act. 

The Act affords cooperative associations 

the same protections against 

discrimination as are afforded to all 

other covered producers.122 Thus, 

protections for cooperatives against 

discrimination were contemplated at the 

time of the Act’s passage.123

In interpreting the Act in light of the 

aforementioned policy direction, AMS 

has sought to stamp out market 

exclusion on prohibited bases. This 

final rule establishes a prohibition of 

undue prejudice or unjust 

discrimination against covered 

producers on the bases of race, color, 

religion, national origin, sex (including 

sexual orientation and gender identity), 

disability, marital status, or age; or 

because of the covered producer’s status 

as a cooperative. Transitioning from the 

proposed rule’s use of the more flexible 

‘‘market vulnerable individual’’ to the 

more specific list of delineated terms, 

the final rule interprets the Act 

consistent with the antidiscrimination 

mandates in other related statutes, 

including the ECOA, which is already 

enforced by AMS for markets subject to 

the Act,124 and the AFPA. AMS also 

references the Equal Employment 

Opportunity Commission (EEOC) 

definitions (described below) for 

clarification regarding which 

characteristics a producer must possess 

to be considered a member of one or 

more protected classes. It is appropriate 

for the Secretary to consider these other 

authorities in effectuating the purposes 

of the Act as they effect a similar 

purpose to this final rule.125

The EEOC has described racial 

discrimination as discrimination based 

on an ‘‘immutable characteristic 

associated with race, such as skin color, 

hair texture, or certain facial features.’’ 

Although race and color may appear 

indistinguishable, they are not. 

According to the EEOC, ‘‘color 

discrimination occurs when a person is 

discriminated against based on the 

lightness, darkness, or other color 

characteristic of the person.’’ 126 Race 

discrimination involves treating an 

individual differently because of his or 

her race. National origin as a protected 

class is defined as disparate treatment 

because an individual is ‘‘from a 

particular country or part of the world, 

because of ethnicity or accent, or 

because they appear to be of a certain 

ethnic background (even if they are 

not).’’ 127 Ethnicity is covered under 

national origin.128 Religion as a 

protected basis is defined as 

discrimination based upon a person’s 

religious beliefs. EEOC reports that the 

law protects people in recognized 

‘‘organized religions,’’ but also those 

‘‘who have sincerely held religious, 

ethical or moral beliefs.’’ 129 Sex as a 

protected basis includes discrimination 

based upon a person’s status as 

pregnant, one’s sexual orientation, and 

one’s gender identity.130 The EEOC 


ddrumheller on DSK120RN23PROD with RULES2
16122 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

131U.S. Equal Employment Opportunity 

Commission (EEOC). No date. Disability 

Discrimination and Employment Decisions. 

Accessed at https://www.eeoc.gov/disabilitydiscrimination-and-employment-decisions on 

November 15, 2023. 

132Equal Credit Opportunity Act (ECOA). No 

date. Access at https://www.fdic.gov/resources/ 

supervision-and-examinations/consumercompliance-examination-manual/documents/5/v-7- 

1.pdf. 

133U.S. Equal Employment Opportunity 

Commission (EEOC). No date. Age Discrimination. 

Accessed at https://www.eeoc.gov/agediscrimination on 10–04–2023. 

134Co-ops: A Key Part of Rural America, Co-ops: 

A Key Part of Rural America, USDA, available at 

https://www.usda.gov/topics/rural/co-ops-key-partfabric-rural-america. See also AFPA § 2301. 

Congressional findings and declaration of policy. 

135See e.g., ‘‘Discrimination and retaliation mean 

big profits for companies at the farmer’s expense. 

While meatpackers rake in record profits during the 

pandemic, farmers make less, and eaters are left 

paying more at the grocery store. Farmers who 

complain about their pay or the fairness of their 

contracts run the risk of losing their contracts, 

putting their homes and livelihoods at risk.’’, 

available at https://www.regulations.gov/comment/ 

AMS-FTPP-21-0045-0051; see also, ‘‘This rule is 

much needed so farmers can tell the truth about 

their contracts and so consumers can know what 

producers are actually doing to the earth, the 

animals, and the farmers.’’, available at https://

www.regulations.gov/comment/AMS-FTPP-21-0045- 

0298. 

defines disability as follows: ‘‘Has a 

physical or mental condition that 

substantially limits a major life 

activity;’’ a ‘‘history of disability,’’ and 

‘‘is subject to an adverse employment 

action because of a physical or mental 

impairment the individual actually has 

or is perceived to have, except if it is 

transitory (lasting or expected to last six 

months or less) and minor.’’ 131

ECOA defines marital status as the 

‘‘existence, absence, or likelihood of a 

marital relationship between the 

parties,’’ and so marital discrimination 

would be upon those bases.132 Age 

discrimination is defined as 

discrimination against those individuals 

40 and older on the basis of their age.133

Cooperatives are described as ‘‘producer 

and user-owned businesses that are 

controlled by, and operate for the 

benefit of, their members, rather than 

outside investors.’’ 134 As explained 

above, in formulating this rule, AMS 

principally drew on its expertise and 

comments gathered from market 

participants about how undue 

discrimination manifests in markets, 

and considered the relevant references 

that concern this type of discrimination. 

These include the above referenced 

EEOC, ECOA, and AFPA-related 

approaches because these approaches: 

first, align with the intent of the Act to 

prohibit all instances of unjust 

discrimination and undue prejudice; 

second, effectuate the purposes of the 

final rule to clearly prohibit that 

discrimination; and third, promote more 

inclusive competition by protecting the 

individuals who participate in the 

market. 

Because of the Act’s broad 

applicability (as discussed in section 

III—‘‘Authority’’); the similar language 

used in secs. 202, 304, 305, and 312 of 

the Act; and the series of statutes 

outlining a range of prejudices 

identified as being deserving of public 

policy efforts to ensure full market 

access; AMS concludes that producers 

who have been subjected to 

discrimination, prejudice, disadvantage, 

or exclusion on the specific bases set 

forth in this final rule should be covered 

by the prohibitions against undue 

prejudice or disadvantage and unjust 

discrimination as enumerated by sec. 

202 of the Act. 

To stamp out unjustly discriminatory 

and unduly prejudicial conduct and 

support a more inclusive marketplace, 

AMS, in § 201.304, lays out the 

protected bases against which undue 

prejudices or disadvantages and unjust 

discrimination are prohibited, and then 

describes the specific conduct that, 

when initiated against a producer 

belonging to one of the protected bases, 

is prohibited. Paragraph (a)(1) prohibits 

a regulated entity from prejudicing, 

disadvantaging, inhibiting market 

access, or otherwise taking an adverse 

action against a covered producer on the 

basis of the covered producer’s (i) race, 

color, religion, national origin, sex 

(including sexual orientation and 

gender identity), disability, marital 

status, or age; or (ii) the covered 

producer’s status as a cooperative. The 

sources of these bases are discussed 

above. Paragraph (a)(1)’s prohibition as 

‘‘based upon’’ is intended to be broader 

than ‘‘but for’’ causation and so capture 

when the protected characteristics or 

status are a material, or non-trivial, 

element of the decision to take an 

adverse action against a covered 

producer. AMS expects that fact-finding 

tribunals will establish the necessary 

processes for proving these elements, 

with an eye toward the protections for 

covered producers and for open, 

inclusive markets that this rule is 

designed to provide. 

Though this regulation prohibits 

prejudice or disadvantage against a 

covered producer on the basis of the 

specified statuses, AMS notes that 

regulated entities may decline to do 

business with covered producers for 

justified economic reasons. For 

example, a regulated entity may refuse 

to contract with a cooperative of 

covered producers when the contract 

would not be cost-effective for the 

entity, regardless of the cooperative 

status of the producers. In this 

hypothetical example, the regulated 

entity would not be unduly prejudicing 

cooperatives of covered producers based 

on their status as a cooperative. Instead, 

the regulated entity would have a 

nonprejudicial basis for its business 

decision. 

Section 201.304(a)(2) describes the 

actions that prejudice, disadvantage, 

inhibit market access, or are otherwise 

adverse under paragraph (a)(1). These 

actions were chosen because they relate 

to fairness in contracting, which is a 

consistent concern among producers; 

and are actions that PSD has determined 

are a recurring problem in the industry, 

directly impacting producers’ financial 

well-being. In response to the proposed 

rule, many commenters noted the 

financial repercussions of lack of 

fairness in contracting.135 Under 

§ 201.304(a)(2), regulated entities may 

not prejudice or disadvantage covered 

producers on the basis of a protected 

status by: (i) offering contract terms that 

are less favorable than those generally or 

ordinarily offered to similarly situated 

covered producers; (ii) refusing to deal 

with a covered producer on terms 

generally or ordinarily offered to 

similarly situated covered producers; 

(iii) performing under or enforcing a 

contract differently than with similarly 

situated covered producers; (iv) 

requiring a contract modification or 

renewal on terms less favorable than 

similarly situated covered producers; (v) 

terminating or not renewing a contract 

with a covered producer; and (vi) any 

other action that a reasonable producer 

would find materially adverse. 

Paragraph (a)(2)(i) prohibits the 

offering of less favorable contract terms 

to covered producers on the basis of 

their status as members of a protected 

class. In the Agency’s experience, 

offering less favorable contract terms 

than those generally or ordinarily 

offered to similarly situated covered 

producers is a means through which 

regulated entities can prejudice or 

disadvantage producers. For example, 

the Agency has received complaints that 

the bidding on livestock by regulated 

entities occurs at a less advantageous 

time for certain producers on the basis 

of the classes protected under this rule 

resulting in lower prices or less 

favorable delivery terms. Similarly, in 

the Agency’s experience, poultry 

growers have complained about being 

offered less favorable growing terms on 

the basis of the classes protected under 

this rule. This rule does not prohibit 

ordinary contracting for different prices 

on the basis of differences in product 


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136See e.g., 61 Cong. Rec. H1860 (1921): 

‘‘However, their [packers] very organization has 

given them a power for evil as well as good, and 

evil practices should always be condemned.’’ and 

‘‘. . . the right thing to do is to devise a law which, 

while maintaining and getting the advantage for the 

people of all of the fine workings of these great 

organizations, at the same time control them in 

such a way as to destroy the abuses that are 

connected with their operation.’’ 

quality, service, transportation cost, or 

delivery terms. 

Paragraph (a)(2)(ii) prohibits regulated 

entities from refusing to deal with a 

covered producer on terms generally or 

ordinarily offered to similarly situated 

covered producers. This refers to 

situations in which a regulated entity 

makes no reasonable effort to deal, bid, 

or negotiate with a covered producer on 

the basis of the covered producer’s 

status as a member of a protected class. 

Such refusal to deal has no connection 

with the service or quality of product 

offered, but rather is due, in material 

part, to the personal characteristics or 

status of the producer and restricts the 

producers’ ability to obtain the fair 

market value of their products and 

services. In today’s highly vertically 

integrated and concentrated markets, 

refusal to deal by one regulated entity 

will often leave a producer with very 

few, if any, parties to contract with, 

unduly inhibiting the competitive 

marketplace when performed on the 

bases prohibited by this final rule. 

Paragraph (a)(2)(iii) prohibits 

regulated entities from performing 

under or enforcing a contract differently 

than with similarly situated producers. 

A violation of this regulation would 

occur when a regulated entity—based 

upon the covered producer’s protected 

characteristics—inconsistently enforces 

its contracts as it would with similarly 

situated producers. For instance, a 

selective information disclosure would 

represent a selective performance of 

contract when a regulated entity 

withholds materially relevant 

information from one covered producer 

that the regulated entity generally or 

ordinarily provides to other covered 

producers. In these instances, 

information-deprived producers will 

have an incomplete picture of their 

business relationships with regulated 

entities, and therefore will operate at an 

unreasonable disadvantage relative to 

producers who receive the pertinent 

information. Similarly, the Agency has 

received complaints over the years with 

respect to differential performance 

under poultry growing arrangements, 

such as the delivery to affected growers 

of flocks that are sick or otherwise 

known to be likely to perform poorly 

owing to the age of the hens. Those sick 

or poor performing chicks are likely to 

result in lower performance for the 

grower in a poultry grower ranking 

system, which results in lower pay for 

the grower. While that may occur from 

time to time per natural cycles, a 

repeated or intentional delivery of 

underperforming flocks has been 

commonly reported by producers as a 

principal means of adversely affecting 

grower earnings. Similarly, a regulated 

entity withholding or delaying delivery 

of feed would result in lower 

performance and profit for a producer. 

Accordingly, AMS has incorporated 

differential contract performance to 

capture those contractual performancebased means to prejudice or 

disadvantage producers. By clarifying in 

its final rule that the Act prohibits such 

conduct, AMS seeks to better protect 

producers who suffer, or are at risk of 

suffering, this type of harm. 

Paragraph(a)(2)(iv) prohibits a 

regulated entity from, on the basis of a 

covered producer’s protected status, 

requiring a contract modification or 

renewal on terms less favorable than 

those for similarly situated covered 

producers. The Agency has determined, 

based on producer complaints, that 

regulated entities sometimes prejudice 

or disadvantage growers by reducing 

numbers of flocks delivered, changing 

types of birds raised, or otherwise 

changing contract terms that result in 

lower incomes for growers. Poultry 

producers commonly experience these 

types of contract modifications. 

Livestock producers also experience 

modifications, such as a change from a 

cash negotiated contract to a negotiated 

grid contract or other purchase type that 

may be adverse from the perspective of 

the producer depending on the facts and 

circumstances. Therefore, in the final 

rule, AMS seeks to clarify that 

unfavorable contract modification or 

renewal by a regulated entity, on the 

basis of a protected class, amounts to a 

violation under the Act. This rule, by 

itself does not prohibit renegotiations or 

failure to renew a contract on the basis 

of changes in the market. However, 

while this rule does not distinguish 

modification for other reasons, many 

contract terms under the Act are not 

subject to modification during 

performance of the contract at all 

because any contract modification that 

serves to delay or reduce full payment 

is an unfair practice under sec. 202(a) of 

the Act. 

Paragraph (a)(2)(v) prohibits regulated 

entities from terminating or not 

renewing a contract with a covered 

producer on the basis of a covered 

producer’s status as a protected class. 

Contract termination can have 

devastating consequences for producers 

that have invested substantial sums in 

infrastructure that only meets the 

requirements of a particular integrator. 

Paragraph (a)(2)(vi) prohibits 

regulated entities from any other action 

that a reasonable covered producer 

would find materially adverse. This 

provision provides a broad and flexible 

approach to these prohibitions and 

allows for ‘‘material’’ to be determined 

by the facts and circumstances of each 

case where producers were harmed. 

Finally, § 201.304(a)(3) delineates two 

exceptions to the prohibition on 

prejudicial or discriminatory conduct 

against covered producers on a 

protected basis. In one, the regulated 

entity is fulfilling a religious 

commitment relating to livestock, meats, 

meat food products, livestock products 

in unmanufactured form, or live 

poultry; in the other, a Federally 

recognized Tribe, including its wholly 

or majority-owned entities, 

corporations, or Tribal organizations, is 

performing Tribal governmental 

functions. As discussed in Section V— 

Changes from the Proposed Rule, these 

exceptions were added in response to 

commenters’ request that some 

exceptions be provided to the 

prohibition on undue prejudice and 

unjust discrimination. To safeguard the 

free exercise of religion, AMS has 

provided an exception to allow 

discriminatory conduct necessary to 

fulfill religious commitments 

surrounding livestock care and meat 

production. To conform with 

longstanding jurisprudence surrounding 

Tribal sovereignty, AMS has provided 

an exception to allow Tribal entities to 

preference their own Tribal members in 

the purchase and sale of livestock. 

C. Retaliation (§ 201.304(b)) 

Section 201.304(b) establishes 

protected activities for covered 

producers and prohibits regulated 

entities from engaging in retaliatory 

conduct based on those activities. As 

noted previously, sec. 202(a) of the Act 

prohibits unjust discrimination. This 

regulation is designed to protect the 

essential activities producers must 

engage in to bargain effectively and 

exercise their economic rights, and in 

doing so obtain the full value of their 

livestock or poultry products or 

services. As a result, retaliation against 

producers because they have engaged in 

protected activities is disparate 

treatment that the Act intended to 

prohibit.136 Retaliatory conduct is a way 

for regulated entities to exploit their 

market power. Increased concentration 

has facilitated the exercise of market 

power through various contracting 

practices. Moreover, because producers 


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16124 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

137See e.g., ‘‘Farmers should be able to 

participate in producer organizations and 

associations. Farmers have expressed concern that 

associations, organizations and the farmers who 

join them have repeatedly been targets of retaliatory 

behavior by meat companies. When farmers 

participate in these organizations it helps fill in the 

information gap for their business and keeps our 

economic markets competitive. 

Farmers and Ranchers should be able safely 

participate as witnesses in any proceeding relating 

to violations of the Packers and Stockyards Act. 

Unfortunately, there are recent examples of cattle 

rancher witnesses who were threatened and 

intimidated so much that they decided not to testify 

before Congress at a hearing about cattle markets. 

The ability to testify without fear of retaliation is 

essential to promoting fair and competitive markets 

in the livestock and poultry industries.’’, available 

at https://www.regulations.gov/comment/AMSFTPP-21-0045-0299; see also, ‘‘The ability to 

express an opinion and testify without fear of 

retaliation is essential to promoting healthy, fair 

and competitive markets in the livestock and 

poultry industries, as it is in all aspects of a free 

and fair democracy.’’, available at https://

www.regulations.gov/comment/AMS-FTPP-21-0045- 

0297. 

138See e.g., 61 Cong. Rec. H1860 (1921). 139 7 U.S.C. 291. 

have few processor choices in these 

markets, threats of retaliation and 

market exclusion take on heightened 

credibility. 

AMS determined the protected 

activities to include in § 201.304(b)(2) 

based on commonly recorded 

complaints from the industry, case law, 

USDA/DOJ workshops, conversations 

with AMS personnel, and a recently 

voiced concern from Congress. AMS 

also identified these types of activities 

because of their potential to mitigate 

certain ways that market power is 

exercised. The retaliatory conduct 

prohibited by this regulation covers a 

broad range of circumstances that AMS 

has determined occur commonly in 

connection with livestock, meats, meat 

food products, livestock products in 

unmanufactured form, or live poultry. 

Free exercise of the protected activities 

facilitates a competitive and transparent 

market, ensuring producers can capture 

the full value of their livestock or 

growing services. 

Section 201.304(b)(1) establishes that 

a regulated entity may not retaliate or 

otherwise take an adverse action against 

a covered producer based upon the 

covered producer’s participation in 

protected activities. As described in 

Section V—Changes from the Proposed 

Rule,’’ paragraph (b)(1)’s prohibition as 

‘‘based upon’’ is intended to be broader 

than ‘‘but for’’ causation and so capture 

when the protected characteristics or 

status are a material, or non-trivial, 

element of the decision to take an 

adverse action against a covered 

producer. AMS expects that fact-finding 

tribunals will establish the necessary 

processes for proving these elements, 

with an eye toward the protections for 

covered producers and for open, 

inclusive markets that this rule is 

designed to provide. 

Section 201.304(b)(2) lists the 

activities that are protected. Paragraph 

(b)(2) also provides a caveat that the 

protected activities must not otherwise 

be prohibited by Federal, Tribal, or State 

law, including antitrust laws. As 

outlined in the following paragraphs, 

these activities form an essential 

foundation for producers to receive the 

benefit of their bargained for exchange 

and the protections afforded under the 

Act itself. Acts of retaliation to chill or 

curtail these protected activities offer no 

competitive benefits to the market. 

Commenters to the proposed rule 

echoed these concerns.137 The Act was 

designed to address market abuses and 

business practices that inhibit 

producers’ ability to obtain the full 

value of their products and services.138

Covered producers have complained to 

AMS over the years of having suffered 

retaliation or fearing retaliation for 

engaging in the conduct identified in 

this paragraph. 

Specifically, paragraph (b)(2)(i) 

protects a covered producer’s ability to 

communicate with a government entity 

or official or to petition a government 

entity or official for redress of 

grievances with respect to livestock, 

meats, meat food products, livestock 

products in unmanufactured form, or 

live poultry. A covered producer must 

be able to freely seek redress of 

grievances to ensure the protections 

afforded by the Act and its regulations 

have their intended effect. Government 

regulators must also have the ability to 

fully appreciate the views of market 

participants to ensure that the rules and 

regulations—and enforcement of those 

laws and regulations—are sufficiently 

responsive to market realities and 

divergent interests and business 

practices in the marketplace. Hindering 

the free flow of market information 

creates risks of market distortions and 

will impair the ability for those with 

less economic power to operate in the 

marketplace. 

In paragraph (b)(2)(ii), AMS adds a 

new protection for a covered producer 

to refuse a regulated entity’s request that 

the producer communicate with a 

government entity or official when that 

communication is not required by law. 

Just as covered producers have the right 

to communicate with government 

entities or officials to ensure their rights 

are protected, so too do they have the 

right to decide when and under what 

circumstances they engage in such 

communication. Based on its experience 

regulating the livestock sector, AMS is 

aware that regulated entities may coerce 

covered producers to contact the 

government on regulatory and policy 

matters and to espouse positions that 

the covered producers disagree with. 

AMS has received reports frequently in 

the past, and including within the last 

two years, of regulated entities 

pressuring producers to oppose 

regulations that the producers support, 

and covered producers reported similar 

concerns to AMS during earlier 

rulemaking initiatives as well. Indeed, 

regulated entities should not punish a 

covered producer for the producer’s 

decision to talk to government agencies 

or not, regardless of the producer’s 

reasons. 

The lack of clarity around 

prohibitions on retaliation in 

agricultural markets—clarity which this 

rule aims to provide—impairs AMS’s 

ability to investigate potential violations 

and effectively enforce the Act. 

Accordingly, AMS has added 

§ 201.304(b)(2)(ii) to clarify that the rule 

protects a covered producer from 

retaliation if the covered producer 

decides not to engage in a 

communication with a government 

entity or official that is not required by 

law. 

Paragraph (b)(2)(iii) protects a covered 

producer asserting the right to formor 

join—or to refuse to form or join— 

aproducer or grower association or 

organization, or cooperative, or the right 

to collectively process, prepare for 

market, handle, or market livestock or 

poultry. ‘‘Asserting the right’’ includes 

the preparatory steps necessary to form 

or join an association or cooperative. 

This provision protects two forms of 

producer interactions: cooperative and 

non-cooperative associations. The 

formulation ‘‘to collectively process, 

prepare for market, handle, or market 

livestock or poultry’’ refers to forming or 

joining a cooperative, tracking the 

language of the Capper Volstead Act.139

Impeding the formation of cooperatives 

through retaliation harms competition 

as individual producers are deprived of 

the chance to mitigate market power 

abuse by bargaining collectively. The 

Agricultural Fair Practices Act explicitly 

protects the right of individual farmers 

to join cooperative organizations to 

preserve their marketing and bargaining 

position, stating that ‘‘[i]nterference 

with this right is contrary to the public 

interest and adversely affects the free 

and orderly flow of goods’’ (7 U.S.C. 

2301). 

Non-cooperative associations and 

organizations are also core activities 

under the Act deserving of protection 


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140Accessed at https://www.justice.gov/media/ 

1244676/ on 10/03/2023. 

against regulated entity coercion 

because they afford covered producers 

the opportunity to combine their 

resources to potentially counteract 

market imbalances and capture 

opportunities at scale. For example, 

they provide a means for covered 

producers to share information 

regarding the production of poultry and 

livestock (within permissible scope of 

the Federal antitrust laws) even when a 

cooperative is not feasible. They also 

enable producers to potentially uncover 

and address problematic practices in the 

industry, including through working 

together to reduce the risk of seeking 

redress of grievances, among other 

benefits. Some producer associations 

also provide means for producers to 

obtain lower cost inputs, such as 

gasoline. AMS believes that retaliating 

against producers for engaging in these 

activities hinders the free flow of 

information and hampers producers’ 

ability to fairly compete in the market 

and realize full value of their livestock 

and poultry. An assertion of rights in 

both these contexts may involve 

expressing interest or intent to engage in 

these activities or engaging in these 

activities. 

Paragraph (b)(2)(iii) also protects a 

covered producer’s right to refuse to join 

a producer or grower association or 

organization. AMS added protection for 

refusing to form or join a producer or 

grower association or organization in 

response to public comment on the 

proposed rule, as commenters noted 

that producers have experienced 

pressures from regulated entities to join 

certain organizations that may express 

views or interests in the livestock or 

poultry industry that are contrary or not 

fully reflective of the producer’s views 

regarding their own interests. 

Paragraph (b)(2)(iv) protects a covered 

producer’s ability to communicate or 

cooperate with a person for the 

purposes of improving production or 

marketing of livestock or poultry. ‘‘A 

person’’ is intended to be broad, and 

includes USDA’s Extension and other 

academic experts, businesses and 

associations, advisors and associates of 

the covered producer, other covered 

producers, including someone under 

contract with the same regulated entity. 

This regulation protects a covered 

producer’s ability to communicate or 

cooperate with other persons, including 

efforts to obtain higher or otherwise 

more appropriate compensation from 

regulated entities, to the extent 

permissible under Federal antitrust laws 

and cooperative laws. Protecting such 

communications enables the producer 

to obtain help to enhance their ability to 

compete in the market. Such 

communication may include, for 

example, communication with 

extension programs or with 

independent veterinarians and animal 

health experts. It would also include 

communications with persons— 

including other producers—relating to 

potential illegal market abuses, 

anticompetitive conduct, or otherwise 

illegal conduct by regulated entities, as 

that conduct would obstruct the covered 

producer’s ability to secure the full 

value of their livestock or poultry 

product or services. AMS notes that 

communications on these matters when 

with the government would be 

protected by paragraph (b)(2)(i), and 

would include but not be limited to 

communications with: USDA; the U.S. 

Department of Justice; the Federal Trade 

Commission; a State or Tribal attorney 

general or agriculture department; or a 

Federal, State, or Tribal legislative office 

or committee or judicial tribunal. 

Paragraph (b)(2)(v) protects a covered 

producer’s ability to communicate, 

negotiate, or contract with a regulated 

entity, another covered producer, a 

commercial entity, or a consultant for 

the purpose of exploring or entering into 

a business relationship. The purpose of 

the provision is to preserve and promote 

the competitive position of the covered 

producer and ensure that a regulated 

entity’s retaliation does not discourage a 

covered producer from seeking 

competitive alternatives. It affords 

producers the opportunity to realize the 

full market potential of their products 

and services and participate in the 

market fully, including through price 

discovery and competition between 

multiple regulated entities. For 

example, a covered producer may want 

to seek information from a regulated 

entity with which they do not currently 

have a business relationship regarding 

the possibility of a future business 

relationship, such as entering into a 

contract. Or, a covered producer may 

enter into a contract to sell livestock in 

the market or through an auction or 

exchange. Protecting these activities 

allows covered producers to freely 

compare potential business 

relationships and choose between 

several regulated entities, encouraging 

competition. As also discussed in 

Section V—Changes from the Proposed 

Rule, communications of this type can 

improve production efficiency and price 

discovery mechanisms. Restricting 

participation in these activities 

forecloses full market participation by 

producers. 

Paragraph (b)(2)(vi) protects a covered 

producer’s ability to support or 

participate as a witness in any 

proceeding under the Act or any 

proceeding that relates to an alleged 

violation of any law by a regulated 

entity. Because of the close-knit and 

concentrated markets in which covered 

producers operate, AMS believes that 

protecting some covered producers as 

witnesses may enable other covered 

producers to effectuate their rights 

under the Act and related laws, which 

would improve market integrity in the 

markets governed by the Act. Without 

such protections, enforcement of the Act 

may be frustrated overall. 

Finally, paragraph (b)(2)(vii) protects 

a covered producer’s ability to assert 

any of the rights granted under the Act 

or the regulations in 9 CFR 201, or to 

assert rights afforded by their contract. 

These rights include, for example, 

producers’ rights to view the weighing 

of flocks, which is legally protected but 

which producers have complained is 

not practically enforceable. In the 2010 

USDA–DOJ public workshop on the 

poultry market, a grower said he was 

retaliated against for asserting his right 

to view his flock being weighed; the 

integrator ‘‘cut me off from growing 

business and cost me hundreds of 

thousands of dollars.’’ 140 Although 

these rights are ostensibly protected by 

laws, regulations, or legal contracts, 

they lose their efficacy if covered 

producers suffer repercussions for 

asserting them. 

Section 201.304(b)(3) enumerates the 

actions that are retaliation or an 

otherwise adverse action under 

paragraph (b)(1) of this section. The 

final rule intends to capture the widest 

range of conduct harmful to producers, 

where such harms are based upon 

activities protected by the rule. The 

focus in any inquiry under this final 

rule is whether the regulated entity has 

engaged in harmful conduct in whole or 

material part because a covered 

producer engaged in any protected 

activity. To provide examples of what 

activities are materially harmful to a 

reasonable covered producer, paragraph 

(b)(3) sets out that regulated entities are 

prohibited from (i) terminating or not 

renewing a contract with a covered 

producer; (ii) performing under or 

enforcing a contract differently than 

with similarly situated covered 

producers; (iii) requiring a contract 

modification or a renewal on terms less 

favorable than those for similarly 

situated covered producers; (iv) refusing 

to deal with a covered producer on 

terms generally or ordinarily offered to 

similarly situated covered producers; (v) 

interfering in farm real estate 

transactions or contracts with third 


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16126 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

parties; (vi) taking any other action that 

a reasonable covered producer would 

find materially adverse. 

Paragraph (b)(3)(i) prohibits 

terminating or not renewing a contract 

with a covered producer because the 

covered producer has engaged in 

protected activities. This practice can 

have devastating consequences for 

producers that have invested substantial 

sums in infrastructure that only meets 

the requirements of a particular 

regulated entity. Furthermore, in 

concentrated markets, losing a contract 

may put a producer out of business as 

the producer has few, if any, other 

livestock or poultry buyers to whom 

they can sell livestock or poultry. 

Paragraph (b)(3)(ii) prohibits 

performance under or enforcement of a 

contract differently as compared to 

performance under or enforcement of 

contracts for similarly situated covered 

producers as retaliation for engaging in 

protected activity. Depending on the 

facts and circumstances of the case, the 

‘‘similarly situated producer’’ could be 

the covered producer’s own status quo 

prior to engaging in the protected 

activity. A violation of this regulation 

would occur when a regulated entity, in 

response to a producer engaging in 

protected activities, inconsistently 

enforces its contracts compared with 

contract enforcement for similarly 

situated producers. For instance, the 

Agency has received complaints over 

the years with respect to differential 

performance under poultry growing 

arrangements, such as the delivery to 

affected growers of flocks that are sick 

or otherwise known to be likely to 

perform poorly owing to the age of the 

hens, differential delivery of feed, or 

other differential treatment such as early 

or delayed harvest of birds. Those 

actions are likely to result in lower 

performance for the grower in a poultry 

grower ranking system, which results in 

lower pay for the grower. While that 

may occur from time to time per natural 

cycles, a repeated or intentional 

delivery of underperforming flocks has 

been commonly reported as a principal 

means of adversely affecting grower 

earnings. Accordingly, AMS has 

incorporated differential contract 

performance to capture those 

contractual performance-based means 

that a regulated entity may use to 

retaliate against producers for engaging 

in protected activities. 

Paragraph (b)(3)(iii) prohibits 

requiring a contract modification or a 

renewal on terms less favorable than 

those for similarly situated covered 

producers as retaliation for engaging in 

protected activity. Depending on the 

facts and circumstances of the case, the 

similarly situated producer could be the 

covered producer’s own status quo prior 

to engaging in the protected activity. In 

this final rule AMS seeks to clarify that 

unfavorable contract modification or 

renewal by a regulated entity, if it’s the 

result of a producer engaging in a 

protected activity, is retaliatory conduct 

and amounts to a violation under the 

Act. This behavior is a common way for 

regulated entities to retaliate against 

producers by, for example, reducing the 

number of flocks or their density, 

changing types of birds raised, or 

otherwise changing contract terms that 

result in lower incomes for growers. As 

another example, if a regulated entity 

requires a capital investment from a 

covered producer as part of a contract 

modification or contract renewal that 

the regulated entity is not requiring of 

similarly situated producers, this 

requirement would be a violation of 

paragraph (b)(3)(iii) if the regulated 

entity is requiring the capital 

investment in retaliation for the covered 

producer’s participation in a protected 

activity. 

Paragraph (b)(3)(iv) prohibits refusing 

to deal with a covered producer on 

terms generally or ordinarily offered to 

similarly situated covered producers. A 

violation of this regulation could occur 

if a regulated entity makes no 

reasonable effort to bid or negotiate or 

fails to reasonably attempt to contract in 

good faith with a covered producer, due 

in whole or material part to a producer’s 

prior, or current, participation in 

protected activities. In this context, the 

regulated entity’s refusal to deal is not 

connected with the service or quality of 

the product offered, but rather is 

material in part due to the producer 

exercising his or her rights to engage in 

protected activities. A similarly situated 

producer may, depending on the facts 

and circumstances, be the producer’s 

own prior status quo with the regulated 

entity before the producer engaged in a 

protected activity. This provision 

includes scenarios in which cattle 

producers operate in the cash market for 

livestock. While some cattle producers 

may only be in the cash market a few 

times a year, others may be in the cash 

market weekly. In the latter case, this 

provision would cover certain types of 

retaliation. If a producer sells cattle to 

a particular packer every week, and then 

one week the packer refuses to buy the 

producer’s cattle or offers significantly 

less favorable terms after the producer 

engaged in a protected activity, this 

would constitute retaliation under this 

rule absent evidence of changed 

business conditions necessitating the 

packer’s refusal to deal. AMS believes 

that retaliating against a producer in this 

way is conduct the Act seeks to remedy 

because it raises a barrier to competitive 

entry to the market by decreasing the 

number of parties a producer can do 

business with, which in effect is a 

market failure. 

Paragraph (b)(3)(v)’s prohibition on 

interfering with a covered producer’s 

farm real estate transactions or with 

their contracts with third parties is a 

prohibition against conduct that a 

regulated entity may engage in due to 

the unequal power dynamic that exists 

between producers and the few firms 

available for them to contract with. This 

conduct may take several forms but has 

been observed most commonly to occur 

when a producer attempts to sell its 

farm to a third party and in doing so 

must terminate or fail to renew their 

existing contract with a regulated entity. 

In these situations, the regulated entity 

may choose not to guarantee a similar 

contract, or any contract at all, to the 

prospective buyer. Without this 

guarantee, banks and prospective buyers 

are unlikely to enter the farm real estate 

transaction because the land is of little 

use to them without a contract to grow 

livestock or poultry. This is often seen 

in the poultry sector, where it is alleged 

that regulated entities use the potential 

transfer of farm real estate as an 

opportunity to require growers to make 

capital improvements in exchange for 

their guarantee to contract with the new 

grower. This becomes retaliatory 

because the unreasonable refusal to 

guarantee a future contract with a 

prospective landowner or operator 

dramatically lowers the value of the 

farm operation, to the point of 

obstructing the transfer of the real 

property by the landowner, and yet the 

debt burden on the farm is commonly 

incurred in response to the regulated 

entity’s requests for additional capital 

investments. The seller of farm real 

estate faces an unjust extraction, or else 

they are unable to sell land, as the cost 

of capital improvements required by the 

regulated entity in exchange for a 

guarantee to contract with a new owner 

or operator is not a freely-determined 

agreement. Farm sales transactions are 

not, however, the only circumstance 

where a regulated entity can retaliate 

against a covered producer through 

contracts with third parties. For 

example, covered producers have 

sought to develop new marketing 

opportunities for their livestock and 

poultry through collectively processing 

their product. If the regulated entity 

sought to obstruct the sale of the meat 

or poultry products through distribution 

or retail chains as retaliation against a 


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141See, e.g., generally, Board of Governors of the 

Federal Reserve System, ‘‘Federal Trade 

Commission Act, Section 5: Unfair or Deceptive 

Acts or Practices,’’ Consumer Compliance 

Handbook, available at https://

www.federalreserve.gov/boarddocs/supmanual/cch/ 

ftca.pdf (last accessed June 2022). 

142 eCFR: 9 CFR part 203—Statements of General 

Policy Under the Packers and Stockyards Act. 

covered producer with a material 

interest in the meat or poultry sales 

organization, that interference would be 

covered by this rule. 

Paragraph (b)(3)(vi) prohibits any 

other action that a reasonable covered 

producer would find materially adverse. 

This regulation is designed to account 

for a broader scope of actions that are 

considered retaliatory. Under this 

provision any conduct would be 

considered prohibited retaliation if such 

conduct caused material harm to the 

covered producer relative to the covered 

producer’s situation prior to the 

allegedly retaliatory conduct, or relative 

to conduct toward similarly situated 

producers. This provision provides a 

broad and flexible approach to these 

prohibitions and allows for ‘‘material’’ 

to be determined by the facts and 

circumstances of each case. As 

discussed under Section V—Changes 

from the Proposed Rule, some 

retaliatory activities may occur outside 

the confines of contractual relationship, 

for example, a regulated entity’s 

interference in a covered producers’ 

water rights. The provision also covers 

the act of making a threat to engage in 

an action where the threat can 

reasonably be foreseen to change the 

producer’s conduct or where the threat 

delivers a reasonable possibility of 

material harm. 

When regulated entities punish 

covered producers or deny them 

opportunities afforded to other covered 

producers for engaging in certain 

activities, it is an unjustly 

discriminatory practice. Not only do 

retaliatory practices harm individual 

covered producers; recurrent instances 

and patterns of retaliation erode market 

integrity and discourage fairness and 

competition in the livestock and poultry 

markets. Under § 201.304(b), AMS is 

providing greater clarity, specificity, 

and certainty as to how the Act applies 

with respect to retaliatory behavior. 

This will facilitate higher levels of 

compliance by regulated entities, enable 

AMS to better enforce the Act, and 

position producers to better assert their 

rights under the Act. 

D. Recordkeeping (§ 201.304(c)) 

Paragraph (c)(1) of § 201.304 requires 

that a regulated entity retain all records 

relevant to its compliance with the 

prohibitions on discriminatory behavior 

contained in paragraphs (a) and (b) of 

this section. Records must be retained 

for no less than five years from the date 

of record creation. Paragraph (c)(2) 

states that relevant records may include 

policies and procedures, staff training 

materials, materials informing covered 

producers regarding reporting 

mechanisms and protections, 

compliance testing, board of directors’ 

oversight materials, and the number and 

nature of complaints received relevant 

to this section. 

Recordkeeping is a commonly used 

regulatory compliance and monitoring 

mechanism among market regulators.141

The recordkeeping requirement in this 

rule is not new. AMS currently has the 

authority to require regulated entities to 

create, maintain, release to AMS, and 

dispose of records through the Act and 

its regulations, including sec. 401 of the 

Act and 9 CFR 201.94, 201.95, and 

203.4. Section 401 of the Act requires 

regulated entities to keep ‘‘such 

accounts, records, and memoranda as 

fully and correctly disclose all 

transactions involved in his business 

. . .’’ (7 U.S.C. 221). Such records may 

include details of a single transaction, 

such as the name of the owner of the 

livestock or poultry, date, weight of 

livestock or poultry, number of head of 

livestock, and unit price; all elements 

necessary to recreate the total sum paid 

to the producer or grower by the 

regulated entity. Existing regulations 

under 9 CFR 201 require regulated 

entities to give the Secretary ‘‘any 

information concerning the business 

. . .’’ (§ 201.94) and provide authorized 

representatives of the Secretary access 

to their place of business to examine 

records pertaining to the business 

(§ 201.95). Section 203.4 is another 

relevant existing regulation with respect 

to the types of records to be kept by 

regulated entities and the timelines for 

disposal of these records by the 

regulated entities. 

Existing gaps in both generally 

applicable agricultural and PSD-specific 

data collection make addressing 

widespread reports of discriminatory 

behavior difficult. Access to the types of 

records required by § 201.304(c) will 

assist AMS in assessing the 

effectiveness of a regulated entity’s 

compliance with § 201.304(a) and (b). 

Therefore, this recordkeeping 

requirement is critical for AMS to fulfill 

its duties to prevent, and if necessary 

secure enforcement against, undue and 

unreasonable prejudice and unjust 

discrimination. 

AMS believes that this recordkeeping 

approach—at both the regulated entity 

policy and procedural level, as well as 

at the transactional level—will enable 

the Agency to monitor and facilitate a 

regulated entity’s approach to 

compliance. Recordkeeping will 

encourage regulated entities to adopt 

more robust compliance practices to 

stamp out conduct prohibited by the Act 

in its incipiency. It will also enable 

AMS to uncover conduct that violates 

the rule in any investigation—a 

deterrent which will also strengthen 

compliance. AMS underscores that the 

tone and compliance practices set by 

senior executives play a vital role in 

establishing a corporate culture of 

compliance, which is a critical first step 

toward more inclusive market practices. 

Thus, relevant records may include 

those at the highest levels, such as 

relevant accountability practices of the 

board of directors. In addition to the 

importance of policies and procedures 

in developing a corporate culture of 

compliance, this rule maintains that 

transactional records, where decisionmaking occurs, are also important 

records to keep and to help AMS 

understand why an adverse action was 

taken against a producer or grower by a 

regulated entity. These records may 

include the number and nature of 

complaints received relevant to this 

section; in addition to records already 

required to be retained under § 203.4, 

such as buyers’ estimates; buying or 

selling pricing instructions and price 

lists; correspondence; telegrams; or 

teletype communications and 

memoranda relating to matters other 

than contracts, agreements, purchase or 

sales invoices, or claims or credit 

memoranda.142

AMS is requiring that records be 

retained for five years from their 

creation date to provide a broader 

ability to monitor the evolution of 

compliance practices over time in this 

area, and to ensure that records are 

available for what may be complex 

evidentiary cases. While providing the 

authority for regulated entities to keep 

certain records, sec. 401 of the Act does 

not provide guidance on when records 

can be disposed. Existing regulation at 

9 CFR 203.4 provides for a disposal date 

of two years, with an exception for 

certain records that may be disposed of 

after one year. This rule extends the 

disposal date of most records from two 

years to five years to promote efficient 

USDA monitoring efforts. For some 

records, the current disposal date is one 

year, which could be extended to five 

years under this rule if they are deemed 

relevant to showing compliance with 

this rule. Most records, such as 

specified in sec. 401, ‘‘such accounts, 

records, and memoranda as fully and 


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143 FTC v. Winsted Hosiery Co., 258 U.S. 483 

(1922) See also, ‘‘Businesses that accurately 

represent the total amount consumers will pay up 

front are at a competitive disadvantage to those that 

do not,’’ from FTC–2022–0069–6095 (describing 

harm to competition and honest businesses through 

price obfuscation). p. 77432, https://

www.federalregister.gov/documents/2023/11/09/ 

2023-24234/trade-regulation-rule-on-unfair-ordeceptive-fees. 

144FTC Policy Statement on Deception, 1983. 

Available at https://www.ftc.gov/system/files/ 

documents/public_statements/410531/ 

831014deceptionstmt.pdf. 

145 Ibid. 

146 Kades, Michael. ‘‘Protecting Livestock 

Producers and Chicken Growers,’’ Washington 

Center for Equitable Growth, May 2022, https://

equitablegrowth.org/research-paper/protectinglivestock-producers-and-chicken-growers/. 

147 580 F. Supp. 1465, 1469 (N.D.N.Y. 1984). 

148FTC Policy Statement on Deception, 1983. 

Available at https://www.ftc.gov/system/files/ 

documents/public_statements/410531/831014

deceptionstmt.pdf. (‘‘Third, the representation, 

omission, or practice must be a ‘‘material’’ one. The 

basic question is whether the act or practice is 

likely to affect the consumer’s conduct or decision 

with regard to a product or service.’’). 

149 9 CFR 201.61. 

150 9 CFR 201.43; 9 CFR 201.99. 

151 9 CFR 201.29. 

152 9 CFR 201.56; 9 CFR 201.67; 9 CFR 201.71. 

153Michael Kades, ‘‘Protecting livestock 

producers and chicken growers,’’ Washington 

Center for Equitable Growth (May 2022), https://

equitablegrowth.org/wp-content/uploads/2022/05/ 

050522-packers-stockyards-report.pdf (‘‘Subversion 

of normal market forces by fraud, deception, unfair 

conduct, or market manipulation undermines the 

integrity of the market and deprives producers of 

the true value of their livestock,’’ p. 55.) 

correctly disclose all transactions 

involved in his business . . .’’ are 

currently kept for two years and will be 

extended to five years. Other particular 

records that, if kept, will be required to 

be kept five years instead of the current 

one year, including, for example, 

buyers’ estimates; buying or selling 

pricing instructions and price lists; 

correspondence; telegrams; or teletype 

communications and memoranda 

relating to matters other than contracts, 

agreements, purchase or sales invoices, 

or claims or credit memoranda. 

E. Deceptive Practices (§ 201.306) 

Section 201.306 is designed to 

broadly address deceptive practices in 

the marketplace by establishing four 

categories where deceptive practices 

commonly occur: contract formation, 

contract performance, contract 

termination, and contract refusal. 

Overall, the final rule addresses areas of 

concern regarding deception in 

contracting but does not exhaustively 

identify all deceptive practices that 

violate sec. 202(a) of the Act. Through 

this rule AMS aims to promote a 

marketplace that is free from the type of 

injury the Act was designed to prevent. 

False or misleading statements, or 

omissions of material information, 

during the contracting process or 

operation or termination of that 

contract, are prohibited deceptive 

practices because they prevent or 

mislead sellers or buyers from making 

informed decisions concerning their 

livestock or poultry operations. 

Deception puts honest businesses at a 

competitive disadvantage; and may even 

cause them to adopt deceptive 

practices.143 To capture a range of 

longstanding approaches to deception 

that USDA has taken under the Act, 

AMS is prohibiting the use of false or 

misleading statements, or omission of 

material information during contract 

formation, performance (including 

enforcement or not enforcement of the 

contract), and termination. This rule 

also prohibits regulated entities from 

providing false or misleading 

information to a covered producer or a 

producer association concerning a 

refusal to contract. During this 

rulemaking process, AMS also 

considered the FTC’s interpretation of 

sec. 5 of the FTC Act regarding 

deceptive acts or practices, ‘‘FTC Policy 

Statement on Deception.’’ 144 Like sec. 

202(a) of the Act, sec. 5 of the Federal 

Trade Commission (FTC) Act also 

prohibits deceptive practices. In 1983, 

the FTC adopted the aforementioned 

policy statement summarizing its 

longstanding approach to deception 

cases.145 In this final rule, AMS 

references that policy statement because 

it offers useful guidance owing to the 

similarity of the statutory provision and 

case law history. In addition, AMS 

recognizes the benefits to the practical 

application of this final rule by 

grounding it on the well-understood 

principles of deception identified in the 

FTC policy statement.146

More than 100 years of history 

illustrate the types of conduct 

prohibited as deceptive by the Act, 

which provides a foundation for some of 

the specific deceptions that this 

rulemaking addresses. The regulations 

implemented by this rulemaking are not 

the first to prohibit deception. Current 

regulations under the Act require 

honesty in weighing (9 CFR 201.49 and 

201.71), price reporting (§ 201.53), fees 

(§ 201.98), and business relationships 

(§ 201.67). Even when considering 

whether termination of a contract 

violated the Act, AMS currently 

considers the quality of the 

communication, and therefore considers 

its honesty (see § 201.217). Past cases 

indicate that USDA’s approach, 

generally, is to view representations, 

omissions, and practices from the 

perspective of a reasonable party 

receiving them and determine if those 

deceptions affect the conduct or 

decision of the recipient. As the court 

explained in Gerace v. Utica Veal 

Co.,147 a regulated entity is liable to 

anyone for the damages its deceptive 

practices cause, even if the entity is not 

a direct party to the transaction. 

AMS aims to have regulated entities 

be truthful and straightforward—that is, 

not misleading—in their dealings with 

producers. With § 201.306, AMS seeks 

to uncover the true motive for a 

regulated entity’s treatment of a 

producer with whom they are forming 

or have a contractual relationship. 

Whether contract language was clear 

and written in a language the producer 

understands will be part of any 

evaluation to determine whether a 

statement (including any omission) was 

false or misleading; that determination 

will be dependent on the particular facts 

and circumstances of the contract. 

Violations of the Act that would 

constitute deceptive practices include 

false statements or omissions that are 

material in that they prevent sellers or 

buyers from making an informed 

business decision.148 Thus, obvious 

falsehoods, such as false weighing and 

false accounting, have always been 

considered deceptive practices under 

sec. 202(a) of the Act. Another obvious 

falsehood—delivering checks drawn on 

accounts with insufficient funds, 

whether for livestock or meat—is also 

deceptive. Moreover, the Act requires 

honest dealing, so misleading omissions 

of material information necessary to 

make a statement not false or misleading 

are also prohibited. Prohibited 

omissions include failure to tell a 

business partner that the regulated 

entity was receiving a commission from 

a competitor,149 sales records that omit 

relevant information,150 or failure to 

have the required bond.151 And finally, 

where regulated entities have close 

business relationships, kickbacks and 

bribes undermine the ability of 

producers and consumers to rely on an 

honest market and are therefore 

deceptive.152

Producers should not be misled with 

respect to their business decisionmaking with regulated entities. 

Deception can prevent producers from 

obtaining the full value of their products 

and services. In markets pervaded by 

deception, formerly honest businesses 

may be compelled to adopt deceptive 

practices if they are to remain 

competitive.153 Moreover, in a 

concentrated market, if producers are 

misled regarding why regulated entities 

take certain actions, in particular 

refusing to deal with them, they cannot 


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154 In re: Larry W. Peterman, d/b/a Meat Masters, 

42 Agric. Dec. 1848 (1983), aff’d Peterman v. United 

States Dep’t of Agric, 770 F.2d 888 (10th Cir. 1985). 

155United States v. Hulings, 484 F. Supp. 562, 

567 (D. Kan. 1980). See also In Re: Mid-W. Veal 

Distributors, 43 Agric. Dec. 1124, 1139–40 (1984), 

citing In re: Norwich Veal and Beef, Inc., 38 Agric. 

Dec. 214 (1979), In Re: Raskin Packing Co., 37 

Agric. Dec. 1890, 1894–6 (1978). 

156Schumacher v. Tyson Fresh Meats, Inc., 434 

F.Supp.2d 748 (Dist. S.D. 2006). 

157Bruhn’s Freezer Meats, 438 F.3d 1337 (8th Cir. 

1971). 

158See Bruhn’s Freezer Meats, 438 F.3d 1337 (8th 

Cir. 1971); Solomon Valley Feedlot, 557 F.2d at 717; 

Gerace v. Utica Veal Co., 580 F. Supp. 1465, 1470 

(N.D.N.Y. 1984). 

159Parchman v. U.S. Dep’t of Agric., 852 F.2d 

858, 864 (6th Cir. 1988) (interpreting sec. 312 of the 

Act). 

160 Garace, 580 F. Supp. At 1470. 

161 In re: Excel Corporation, 63 Agric. Dec. 317 

(2004), aff’d Excel Corp. v. United States Dep’t of 

Agric., 397 F.3d 1285, 1293 (10th Cir. 2005). 

162 397 F.3d at 1291. 

plan or mitigate the risks they may face. 

For these reasons, this final rule 

establishes a robust regulatory 

framework prohibiting deceptive 

practices in a range of contracting 

circumstances. Such a framework 

should provide a broad, although nonexhaustive, set of prohibitions to 

provide greater certainty for producers 

and regulated entities alike in the 

integrity of business dealings in the 

livestock and poultry markets. 

Paragraph (a) of this section sets forth 

the scope of the prohibition on 

deceptive practices by establishing that 

the prohibitions contained in 

paragraphs (b) through (e) of § 201.306 

apply to livestock, meats, meat food 

products, livestock products in 

unmanufactured form, or live poultry. 

This phrasing, which has been used in 

previous rules under the Act, points to 

the broadest possible interpretation of 

the Act’s jurisdiction over regulated 

entities’ conduct. 

Section 201.306(b) prohibits a 

regulated entity from making or 

modifying a contract with a covered 

producer by employing a false or 

misleading statement, or omission of 

material information necessary to make 

a statement not false or misleading. 

Preventing false or misleading 

representations, express or implied, or 

failing to provide the necessary 

information necessary to make a 

representation not misleading during 

the contracting process, are some of the 

most basic protections of the integrity of 

the marketplace. ‘‘By employing’’ 

captures the materiality of the false or 

misleading representation in that the 

representation formed a material part of 

the action under making or modifying 

the contract. Case law applying the Act 

illustrates some of the forms of 

deception that regulated entities may 

take during the offering or formation of 

a contract with producers. While some 

consumer-focused cases under the Act 

have addressed false advertising— 

specifically bait-and-switch advertising 

that occurs through advertising on price 

when, in fact, the customer has to pay 

a higher price at the point of sale,154 a 

regulated entity’s failure to disclose 

information to a covered producer has 

also been held to be deceptive under 

certain circumstances. The Act’s 

purposes include protecting farmers and 

ranchers from receiving less than fair 

market value for their livestock and 

protecting consumers from unfair 

practices. Among the means employed 

to accomplish this purpose is the use of 

surety bonds. Sellers of livestock are 

entitled to the protection of a packer, 

dealer, or market agency’s surety bond 

securing its obligations. Failure to 

maintain an adequate bond is therefore 

a deceptive practice.155 When a packer 

fails to maintain a bond, the seller does 

not know that the sale is unsecured, and 

therefore the seller is at greater risk of 

nonpayment. 

Deception in contract formation is not 

limited to false statements and 

omissions with respect to regulatory 

requirements. The Act includes 

affirmative duties to be truthful. For 

instance, in Schumacher v. Tyson Fresh 

Meats, Inc., the court recognized that 

the Act prohibits a regulated entity from 

negotiating by using published prices it 

knows are inaccurate because using 

incorrect prices deceives the livestock 

seller. In Schumacher, the packer failed 

to disclose to sellers inaccurately 

reported boxed beef prices when it 

negotiated the purchase of cattle based 

on those prices. The court found that 

those deceptive practices violate the 

Act.156 Likewise, Bruhn’s Freezer Meats 

of Chicago, Inc. v. U.S. Dept. of 

Agriculture, affirmed that a variety of 

deceptive practices violate the Act, 

including short weighing, 

misrepresenting grades and cuts of 

meat, and false advertising in the selling 

of meat to customers.157 The Agency’s 

regulation with respect to deceptive 

practices in contract formation prohibits 

all these types of deception. 

Section 201.306(c) prohibits a 

regulated entity from performing under 

or enforcing a contract with a covered 

producer by employing a false or 

misleading statement, or omission of 

material information necessary to make 

a statement not false or misleading. It is 

fundamental to the integrity of the 

marketplace and critical during the 

performance or enforcement of contracts 

that regulated entities are prohibited 

from making false or misleading 

representations—express or implied— 

and that they are prohibited from failing 

to provide the necessary fact or 

information necessary to make a 

representation not misleading. ‘‘By 

employing’’ captures the materiality of 

the false or misleading representation in 

that the representation formed a 

material part of the action under 

performing or enforcing the contract. 

Deceptive practices take many forms 

throughout the operation of a contract. 

USDA and the courts have recognized 

these forms in a variety of 

administrative and Federal enforcement 

actions, including false weighing, false 

or deceptive grading (including failure 

to disclose the formulas for determining 

payment), failure to pay for purchases, 

and pretextual refusals to deal. 

False or inaccurate weighing has long 

been recognized as deceptive under 

secs. 202(a) and 312 of the Act.158 False 

weighing can occur in various ways. In 

some cases, the regulated entity records 

inaccurate weights using an improperly 

calibrated scale. In other cases, a 

regulated entity uses the scale 

improperly. In all these cases, false 

weighing is a plain and straightforward 

instance of a false statement that is 

material to the reasonable producer. 

Even if a regulated entity does not 

intentionally set out to deceive with 

respect to the weight of livestock, the 

Act does not require proof of a 

particularized intent.159 Short weighing 

alone is enough to be an unfair and 

deceptive practice under the Act, 

without regard to the competitive injury 

the short weighing causes.160

False or inaccurate grading has the 

same effect as false weighing because 

deceptive grading prevents the seller 

from receiving the full value of their 

livestock or poultry. A USDA Judicial 

Officer found a deceptive practice when 

a packer failed to inform hog producers 

of a change in the formula it used to 

estimate lean percent in hogs. Lean 

percent was one factor used in 

determining price when the packer 

purchased hogs on a carcass merit basis. 

USDA determined that nearly twenty 

thousand lots of hogs were purchased 

under the changed formula without 

notice to producers, resulting in 

payment of $1.8 million less than they 

would have received under the previous 

formula.161 This type of deceptive 

practice harms honest competitors 

because ‘‘[h]ad hog producers been 

alerted to the change, they could have 

shopped their hogs to other packers.’’ 162

Payment violations can also be 

deceptive, especially issuance of 


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163See, e.g., In Re: Mid-W. Veal Distributors, d/ 

b/a Nagle Packing Co., & Milton Nagle, 43 Agric. 

Dec. 1124, 1140 (1984). 

164See, e.g. Milton Abeles, Inc. v. Creekstone 

Farms Premium Beef, LLC, No. 06–CV– 

3893(JFB)(AKT), 2009 WL 875553, at *19 (E.D.N.Y. 

Mar. 30, 2009) (citing Liberty Mutual Ins. Co. v. 

Bankers Trust Co., 758 F.Supp. 890, 896 n. 7 

(S.D.N.Y.1991); In re FLA Packing & Provision, Inc., 

and C. Elliot Kane, P & S Docket No. D–95–0062, 

1997 WL 809036, at *6 n. 1 (1997); In re: Central 

Packing Co., Inc. d/b/a Plat–Central Food Services 

Co., Inc., a/k/a Plat–Central Food Service Supply 

Co., and Albert Brust, an individual, 48 Agric. Dec. 

290, 297–99 (1989)); see also In Re: Ampex Meats 

Corp. & Laurence B. Greenburg., 47 Agric. Dec. 

1123, 1125 (1988) (citing In Re: Rotches Pork 

Packers, Inc. & David A. Rotches., 46 Agric. Dec. 

573, 579–80 (U.S.D.A. Apr. 13, 1987) In Re: George 

Ash, 22 Agric. Dec. 889 (1963); In re Goldring 

Packing Co., 21 Agric. Dec. 26 (1962); In Re: Eastern 

Meats, Inc., 21 Agric. Dec. 580 134 (1962)). 

165 Van Wyk v. Bergland, 570 F.2d 701, 704 (8th 

Cir. 1978). 

166United States Department of Justice, United 

States Department of Agriculture. May 2010. Public 

Workshops Exploring Competition in Agriculture, 

Poultry. Accessed at https://www.justice.gov/ 

media/1244676/dl?inline on 10/03/2023. p. 366. 167Rural Advancement Foundation International 

(RAFI), ‘‘Comment on AMS–FTPP–21–0045: 

Inclusive Competition and Market Integrity Under 

the Packers and Stockyards Act,’’ available at 

Regulations.gov. 168 Ibid. 

insufficient funds checks. For example, 

regulated entities may withhold 

payment to prevent producers from 

commencing legal action or reporting 

otherwise unrelated violations to 

authorities.163 Failing to pay for meat 

has also been found to be deceptive in 

numerous instances.164 Under the 

similar language of secs. 312 of the Act, 

the Eighth Circuit explained that lack of 

timely payment was unfair and 

deceptive even prior to the enactment of 

sec. 409 of the Act: ‘‘Timely payment in 

a livestock purchase prevents the seller 

from being forced, in effect, to finance 

the transaction.’’ 165

Section 201.306(d) prohibits a 

regulated entity from terminating a 

contract with a covered producer by 

employing a false or misleading 

statement, or omission of material 

information necessary to make a 

statement not false or misleading. 

Employing false or misleading 

representations, express or implied, or 

failing to provide the necessary fact or 

information necessary to make a 

representation not misleading—critical 

protections during the performance or 

enforcement of contracts—are similarly 

fundamental to the integrity of the 

marketplace. ‘‘By employing’’ captures 

the materiality of the false or misleading 

representation in that the representation 

formed a material part of the action 

under performing or enforcing the 

contract. AMS draws on its experience 

in establishing the need for this 

prohibition. AMS notes, for example, 

that poultry growers complain of 

companies terminating their broiler 

production contracts based on pretext or 

for a deceptive reason. Contract 

termination puts the grower at severe 

risk of significant economic loss. The 

potential loss includes not only the loss 

of production income but also a 

grower’s farm or family home, since a 

production broiler house construction is 

often financed with mortgages on those 

assets. Pretextual cancellation, in the 

form of false or misleading 

representations or material omissions, 

may also make even the sale or transfer 

of the broiler production house 

impossible because purchasers may be 

unable to determine if the broiler houses 

have value. 

AMS included the prohibition against 

false or misleading information or 

material omissions in paragraphs (b) 

through (d) to protect producers from 

conduct that employs deceit to disguise 

a regulated entity’s genuine motive. A 

poultry producer stated in a public 

workshop that he relied upon cash flow 

statements provided by the integrator to 

secure a loan for his operation only to 

find out later ‘‘that the document wasn’t 

accurate from the first flock that I placed 

and set. The capital investment of these 

facilities, while they may be greatly 

benefiting the integrator, are not 

returning any value to us 

whatsoever.’’ 166 In another public 

comment, a poultry producer asserted 

that he is ‘‘not given a clear picture of 

the integrator’s operating procedures 

until after a contract has been signed. 

The contracts are very biased and onesided, giving the bulk of control and 

authority to the initiator of the contract 

and then, only after you have committed 

to playing their game you are then given 

the rule book.’’ 167 The producer further 

stated that, ‘‘the practices of the 

integrators are very calculated to ensure 

the integrators are protected legally 

while entrapping the farmer into 

modern day indentured servitude.’’ 168

Section 201.306(e) prohibits a 

regulated entity from providing false 

information to a covered producer or 

association of covered producers 

concerning a refusal to contract. 

Deception related to refusal to contract 

is an unlawful practice designed to 

exclude producers from livestock and 

poultry markets. For example, if a 

producer association is asking on behalf 

of its members why a regulated entity is 

not executing any deals in the cash 

market and the entity lies about why it 

is avoiding the cash market, this could 

impede market entry for the 

association’s members. Owing to the 

risk of retaliation, even with this final 

rule in place, a covered producer may 

depend upon a producer association to 

obtain the necessary understanding why 

the regulated entity is engaging in 

certain practices in the market, such as 

refusing to contract with covered 

producers. 

A regulated entity that refuses to 

contract on unlawful grounds may well 

choose to hide their motives with 

misleading or deceptive statements. 

This regulation recognizes false and 

misleading statements made as 

justification of a refusal to enter into a 

contract as ‘‘deceptive’’ within the 

meaning of the Act. However, when 

refusing to enter into a contract, a 

regulated entity is not required to 

explain its reasoning so long as it does 

not offer a false or misleading statement 

to a covered producer. 

Producers and consumers cannot 

make rational decisions in a dishonest 

market, and honest competitors cannot 

compete when regulated entities 

deceive. With this rulemaking, AMS is 

adding § 201.306 to its existing 

deception regulations under the Act to 

provide a broad array of coverage 

regarding the general circumstances that 

encourage the provision of false or 

misleading information in contracting. 

This regulation does not provide an 

exhaustive list of instances of deceptive 

practices; rather, it establishes four 

categories where deceptive practices 

commonly occur. The intent is to 

provide guidance to covered producers 

on how to effectuate their rights under 

section 202(a) of the Act and to promote 

a marketplace that is free from the type 

of injury section 202(a) was designed to 

prevent. AMS will investigate any 

alleged violations of this regulation and 

its determination will depend on the 

facts and circumstances of each case. 

F. Severability (§ 201.390) 

AMS is adding § 201.390, 

‘‘Severability,’’ to new subpart O to 

confirm that if any provision of subpart 

O, or any component of any provision, 

is declared invalid or if the applicability 

thereof to any person or circumstances 

is held invalid, it is AMS’s intention 

that the validity of the remainder of this 

subpart or the applicability thereof to 

other persons or circumstances shall not 

be affected thereby with the remaining 

provision, or component of any 

provision, to continue in effect. Such a 

provision is typical in AMS regulations 

that cover several different topics and is 

included here as a matter of 

housekeeping. 

This rule aims to address concerns 

around unduly prejudicial, unjustly 

discriminatory, retaliatory, and 

deceptive conduct in the livestock and 


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poultry industry to the broadest 

jurisdiction of the Act. This new subpart 

has two sections that prohibit unduly 

prejudicial, unjustly discriminatory, and 

deceptive practices. This regulation is 

intended to take a series of regulatory 

actions, within this rulemaking, to 

address several different harms on the 

same or similar subjects but not prohibit 

identical conduct. The wrongful 

conduct addressed in the undue 

prejudice and discrimination, 

retaliation, and deception provisions are 

each different—the first focusing on 

adverse action on the basis of a personal 

characteristics or status of the producer, 

the second on certain protected actions 

by the covered producer, and the third 

focused on deception in contracting. 

AMS included these provisions based 

on the likelihood that conduct falling 

within one or more of these sections 

will stifle honest competition or exclude 

independent livestock producers, 

poultry growers, and swine contractors 

from the marketplace. Each provision 

could, however, have been implemented 

on a stand-alone basis without the 

others. Conduct that violates one 

provision is not dependent on 

protections put in place in other 

sections. For example, if a regulated 

entity discriminates against a producer 

on the basis of a protected class in an 

unduly prejudicial manner, AMS may 

enforce the regulation without alleging 

violations of retaliation or deception. 

These new provisions are written so that 

they are not mutually exclusive. 

Furthermore, the benefits of each 

provision of this rule are not diminished 

by the absence of a different provision. 

For example, the benefits of protecting 

producers against retaliation are not lost 

if the rule is held to fail to protect 

against deception or discrimination. 

AMS intends that the severability 

provision operate to the fullest extent 

possible. AMS recognizes that—to a 

limited extent—not all the language of 

the rule is severable. For example, to 

find undue prejudicial discrimination 

under ‘‘race, color, religion, national 

origin, sex (including sexual orientation 

and gender identity), disability, or 

marital status, or age of the covered 

producer,’’ the prejudicial conduct must 

be ‘‘on the basis of’’ one of the specified 

protected bases. AMS recognizes that 

this causation requirement is not 

severable as it is integral to that specific 

provision of the rule. 

However, AMS intends that all other 

portions and components of the rule 

may be severable without affecting the 

remaining portions of the rule, and that 

the rule remains workable and 

continues to serve the interests of the 

agency’s policy goals. For instance, 

AMS intends that the invalidity or 

unenforceability of one of the rule’s 

prohibited bases does not render the 

others invalid or unenforceable. The 

protected bases have different reasons 

for their appearance in the rule. For 

example, if the protected base of 

religion were found invalid or 

unenforceable, this does not negate the 

benefits of including protections for 

another protected base, like sex. Also, to 

further follow this example, the 

language in § 201.304(a)(1)(i) is 

severable from those included in the 

retaliation (§ 201.304(b)) and deception 

(§ 201.306) sections. Therefore, one or

more provisions might be unenforceable

as to an individual or a specific case,

but AMS intends that the remaining

provisions would still be enforced.

Finally, if determining the necessity of

an individual provision to the

enforceability of its entire section, and

the benefits of that section are still

intact without an unenforceable

provision, AMS would intend to retain

the enforceable provisions.

VII. Comment Analysis

AMS received 446 public submissions

in response to the proposed rule. 

Numerous comments to the proposed 

rule expressed concerns that 

concentrated, vertically integrated 

markets expose producers to exclusion 

from the market on bases unrelated to 

the quality of their products or services 

and that the markets in which the 

commenters operate lack sufficient 

honesty, integrity, and fair dealing. In 

addition, numerous comments stated 

that, except for very narrow justified 

circumstances, there are no competitive 

benefits to these practices when 

operating within a market where 

producers are less able to compare, 

negotiate, or change business 

relationships. 

Other commenters were critical of the 

proposed rule. Some commenters 

expressed disagreement with the need 

for the proposed rule, arguing that it is 

duplicative of the Act and existing 

regulations, while other commenters 

stated that the proposed rule’s 

vagueness would make compliance a 

challenge. Other commenters argued 

that the proposed rule would result in 

costly litigation and recordkeeping 

burdens and exceeded AMS’s authority 

under the Act. 

The public comments are summarized 

by topic below and include AMS’s 

responses. 

A. Definitions (§ 201.302)

AMS proposed to add definitions in

§ 201.302 for covered producer,

livestock producer, market vulnerable

individual, and regulated entity. AMS 

received comments about the proposed 

definitions of livestock producer and 

market vulnerable individual. 

Comments about the latter are addressed 

below in Section VII.C.i—Market 

vulnerable individual approach. 

In § 201.302, AMS proposed to define 

livestock producer as any person 

engaged in the raising and caring for 

livestock by the producer or another 

person, whether the livestock is owned 

by the producer or by another person, 

but not an employee of the owner of the 

livestock. AMS proposed to add a new 

definition of covered producer to 

encompass livestock producers as 

defined in this section, along with 

swine production contract growers and 

poultry growers as defined in sec. 2(a) 

of the Act. 

Comment: Several commenters noted 

the proposed definition of livestock 

producer could include individuals 

only tangentially related to livestock 

production, such as accountants 

working for feed yards, truck drivers 

hauling livestock owned by others, 

veterinarians, nutritionists, or 

consultants. The commenters contended 

the proposal opens the definition of 

livestock producer to an unlimited 

number of litigants beyond the scope of 

the Act. 

Similarly, a meat industry trade 

association said AMS should withdraw 

or amend the definition of livestock 

producer because its vagueness 

potentially adds so many individuals to 

the covered producer umbrella as to be 

unworkable. Another association noted 

its confusion when reading the 

definition, given that the definition’s 

wording explicitly excludes employees 

of the owner of livestock, but includes 

anyone who is not an employee of the 

owner of livestock that is engaged in 

raising or caring for livestock. 

AMS Response: AMS is revising the 

definition of livestock producer. AMS 

intended that the term livestock 

producer be defined in a manner similar 

to other terms in the Act, so that the 

protections of the rule would fit 

violations that are described in this 

rulemaking. Under the final rule, 

livestock producer is defined as any 

person—except an employee of the 

livestock owner—engaged in the raising 

of and caring for livestock. As 

commenters noted, the proposed 

definition was vague and potentially 

confusing. The revised definition 

provides clarity by removing 

unnecessary and potentially confusing 

phrasing. In response to commenters’ 

concerns that the term encompasses 

individuals only tangentially related to 

livestock production, AMS has revised 


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the proposed definition to focus this 

final rule on the Agency’s traditional 

role in protecting the producer to the 

fullest extent possible under the Act— 

including but not limited to production 

and marketing. To the extent that the 

producer is harmed through acts that 

the regulated entity takes against an 

employee acting as agent for the 

producer or another entity that the 

covered producer utilizes or relies on 

for production or marketing, the 

producer could still fully benefit from 

the protections of this final rule. 

Whether the non-producer parties could 

benefit from the protections of the Act 

may depend upon particular facts and 

circumstances. 

B. Applicability 

AMS proposed in §§ 201.304 and 

201.306 to apply its prohibitions on 

undue prejudice, retaliation, and 

deceptive practices to swine contractors 

and live poultry dealers as defined in 

sec. 2(a) of the Act and to packers as 

defined in sec. 201 of the Act. Proposed 

§ 201.304(a)(1) would prohibit 

prejudice, disadvantage, or the denial or 

reduction of market access by regulated 

entities against covered producers based 

on their status as ‘‘market vulnerable’’ 

producers. AMS requested comment on 

whether the prejudicial discrimination 

and retaliation provisions should be 

extended to all persons buying or selling 

meat and meat food products, including 

poultry, in markets subject to the Act. 

Comment: An agricultural advocacy 

organization expressed support for 

AMS’s proposal to extend protections to 

all covered producers who experience 

retaliation by regulated entities. 

An agricultural advocacy organization 

said that if AMS adds aspects of 

regional concentration and aspects of 

contract growing arrangements, such as 

high debt load, to the definition of a 

market vulnerable individual, then the 

proposal to provide protection based on 

market vulnerable individual status is 

appropriate. This commenter noted that 

AMS’s question regarding extension of 

the prejudicial discrimination and 

retaliation provisions highlights the 

need for a separate rule addressing 

enforcement of the Act’s prohibition on 

undue preferences. According to this 

commenter, if AMS makes it clear that 

it intends to enforce the Act to stop 

companies from giving undue 

preferences to some sellers, everyone 

participating in these markets will have 

adequate protection. 

AMS Response: AMS appreciates the 

comments regarding a broader 

definition of MVI to include all those 

impacted by the abusive conditions 

aggravated by market concentration. 

AMS recognizes that producers face 

challenges because of consolidated 

market power, including from types of 

conduct this rule aims to address. One 

of the purposes of this rule is to address 

adverse impacts of concentrated markets 

by ensuring inclusive competition free 

of unjust discrimination on the basis of 

race, color, religion, national origin, sex, 

disability, or marital status, or age or 

because of the covered producer’s status 

as a cooperative, as well as to protect 

against retaliation and deception. 

AMS underscores that the protections 

for cooperatives are intended, in part, to 

help producers gain market leverage in 

the face of concentrated markets. In 

1922 Congress passed the CapperVolstead Act providing legal protections 

for producers to collectively process, 

prepare for market, handle and market 

their products. Cooperatives enable 

smaller, disparate producers to band 

together, coordinate in ways that 

otherwise may not be permissible under 

the antitrust laws outside of a single 

company, and otherwise work together 

to obtain a better bargain from market 

counterparties with larger economic 

footprints. AMS will continue to work 

toward addressing problems associated 

with concentration through subsequent 

rulemaking. USDA is also utilizing other 

tools to address undesirable business 

practices born from market 

concentration that adversely impacts 

producers. USDA is investing $1 billion 

to support greater choice for producers 

through expanded local and regional 

processing capacity in meat and poultry. 

USDA has also announced 

enhancements to its antitrust 

enforcement partnerships, including 

investing in partnerships with DOJ 

through farmerfairness.gov and with 

more than 32 State attorneys general, 

updates to its meat and poultry labels 

that will better guard against 

misbranding that damages the signals 

that flow from consumers to producers, 

as well as other agency actions intended 

to address unfavorable behavior by 

regulated entities facilitated by 

concentration in the livestock industry. 

However, addressing unjust 

discrimination solely on the basis of the 

size or indebtedness of the producer is 

outside the scope of this rule, and 

because of the complex economic 

implications of volume preferences and 

efficiencies, would be more 

appropriately considered in the context 

of a future update to undue preferences 

rules. In contrast, undue and 

unreasonable prejudice or disadvantage 

on the basis of the prohibited bases and 

protected activities adversely affects 

allocative efficiency and offers no 

competitive benefits. That is true 

irrespective of whether the unlawful 

conduct occurs in a concentrated market 

or not. 

AMS has shifted away from its market 

vulnerable approach and has adopted a 

well-established standard in line with 

existing economic, civil rights, and 

other regulatory regimes that rely on 

protected bases for discrimination. 

Producers with high debt loads are not 

included in those well-established 

protections; therefore, AMS will not 

include them in its final rule. 

C. Undue Prejudices and Unjust 

Discrimination (§ 201.304(a)) 

AMS proposed new provisions in 

§ 201.304(a) that would prohibit 

regulated entities from prejudicing, 

disadvantaging, or inhibiting market 

access, or otherwise taking adverse 

action against a livestock producer, 

swine production contract grower, or 

poultry grower based on the producer’s 

status as a ‘‘market vulnerable 

individual’’ or as a cooperative. 

i. Market Vulnerable Individual 

Approach 

AMS proposed to prohibit 

prejudicing, disadvantaging, inhibiting 

market access, or otherwise taking 

adverse action against covered 

producers based on their status as a 

market vulnerable individual (MVI). It 

proposed to define that term as a person 

who is a member, or who a regulated 

entity perceives to be a member, of a 

group whose members have been 

subjected to, or are at heightened risk of, 

adverse treatment because of their 

identity as a member or perceived 

member of the group without regard to 

their individual qualities. A market 

vulnerable individual would include a 

company or organization where one or 

more of the principal owners, 

executives, or members would 

otherwise be a market vulnerable 

individual. When defining market 

vulnerable individual in its proposal, 

AMS listed a non-exhaustive list of 

protected classes that would be 

considered market vulnerable such as 

race, ethnicity, or sex or gender 

prejudices (including discrimination 

against an individual for being lesbian, 

gay, transgender, or queer), religion, 

disability, or age. 

AMS requested comment on whether 

the regulatory protections provided by 

the prohibition on undue prejudices for 

market vulnerable individuals and 

cooperatives would assist those 

producers in overcoming barriers to 

reasonable treatment, or otherwise 

address prejudices or threats of 

prejudice in the marketplace. It further 

requested comment on whether specific 


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169 87 FR 60020–21, October 3, 2022. 

groups should be named as market 

vulnerable individuals, whether AMS 

should identify defined protected 

classes, or whether AMS should use a 

‘‘market vulnerable producer’’ 

approach, which extends broad 

antidiscrimination protections to any 

producer belonging to a group subjected 

to or at heightened risk of adverse 

treatment. In addition, it requested 

comment on whether it should delineate 

specific examples of groups that are 

market vulnerable, as well as supportive 

evidence regarding historical adverse 

treatment of such groups. Finally, it 

requested comment on whether the 

undue prejudices provision of the 

proposed rule provides sufficient 

protection regardless of the covered 

producer’s type of business 

organization. 

Comment: Several commenters 

indicated proposed § 201.304(a) would 

provide necessary protections, 

consistent with the Act, against packers 

and processors who leverage their 

market power to injure marginalized 

farmers. Farm bureaus and other 

agricultural advocacy organizations also 

indicated the rule would protect 

producers from certain prejudices, 

unjust discrimination, retaliation, and 

deceptive practices. 

Several commenters stated they 

preferred the market vulnerable 

producer approach to fighting 

discrimination over the traditional 

protected classes approach because it 

would allow for flexibility to address 

different markets and different forms of 

prejudice and discrimination that may 

develop. An agricultural and 

environmental organization stated the 

market vulnerable producer approach 

not only covers instances of 

discrimination based on protected 

characteristics such as race, national 

origin, sex, religion, gender identity, 

and disability, but can also apply to 

other forms of discrimination unique to 

livestock and poultry markets. This 

commenter said this approach is 

consistent with the Act, which prohibits 

‘‘any’’ unjust discrimination, and ‘‘any’’ 

undue prejudice or disadvantage ‘‘in 

any respect whatsoever.’’ Several State 

attorneys general suggested that the 

proposed definition was preferable as 

proposed, without specifying traditional 

protected classes, because it would 

allow for flexibility among different 

markets and forms of prejudice or 

discrimination that may develop over 

time. 

Several agricultural advocacy 

organizations said poultry and cattle 

producers operating in regions with 

monopsony or oligopsony conditions 

should qualify as market-vulnerable 

individuals. Similarly, an academic or 

research institution sought to add 

producers operating in monopsony 

conditions to the definition. A 

commenter suggested AMS use the 

regional Herfindahl-Hirschman index to 

indicate the market vulnerable status of 

producers in a region. Some 

commenters cited heightened risk of 

adverse treatment as a rationale for 

considering these groups to be market 

vulnerable or noted that monopsony 

power has been legally relevant in cases 

under the Act and there is judicial 

precedent for acknowledging 

monopsonist power as a factor in 

adverse impacts to competition, while 

others said these groups meet the 

criteria laid out by AMS in the preamble 

to the proposed rule explaining why 

historically marginalized groups are 

likely to be vulnerable to market 

abuses.169 The latter commenter 

provided detailed evidence that these 

groups met each of the criteria AMS 

identified: their relative ‘‘size, sales, and 

incomes;’’ their ‘‘exposure to 

concentrated market forces;’’ their 

having ‘‘fewer economic resources’’ to 

‘‘counteract’’ adverse market structures; 

and their ‘‘isolation’’ from economic 

networks such as sources of supply, 

other producers, and distribution. 

Several commenters seeking 

protections for producers that are at 

increased risk of being disadvantaged 

due to highly concentrated regional 

markets cited Colorado cattle producers 

as an example, given the USDA has not 

publicly reported the State’s fed cattle 

prices for several years because there are 

too few packers purchasing fed cattle in 

Colorado to overcome USDA 

confidentiality guidelines. Commenters 

noted, with few packers in the region, 

sellers in the region are vulnerable to 

unfair practices. 

An agricultural advocacy association 

recommended that AMS expand the 

MVI definition to include covered 

producers whose geographic locations 

restrict their ability or willingness to 

sell and transport their livestock to two 

or fewer regulated entities. This 

commenter also said that it would be 

helpful for AMS to expand on and 

provide more ‘‘definite form’’ to the four 

socioeconomic factors presented in the 

rulemaking notice. The association 

reasoned that if producers can 

proactively demonstrate their status as 

market vulnerable, it would avoid the 

need for ad hoc microeconomic analyses 

or expert witnesses to make assessments 

on individual bases. 

Several State attorneys general 

suggested AMS specifically address the 

vulnerability that small, rural farmers 

encounter due to their location or 

production size. The commenters stated 

small, rural farmers do not have enough 

local processors, and those processors 

give preference to packer-owned and 

contract livestock for the limited 

packing plant capacity available. An 

agricultural advocacy organization also 

said small, independent cattle 

producers meet many of the criteria for 

being considered market vulnerable, 

arguing for example that they are 

exposed to concentrated market forces 

because they do not receive forward 

contracting arrangements from packers; 

they are denied favorable bonus, 

financing, and risk sharing terms 

common with other arrangements; and 

they are required to sell their cattle to 

packers on at-will cash markets for 

lower aggregate compensation. 

Agricultural advocacy organizations 

also said independent cattle producers 

operating in cash-negotiated spot 

markets should be considered 

vulnerable because of their independent 

status. Other commenters recommended 

AMS expand market vulnerable 

individual status to include non-English 

speakers, people with limited 

education, producers in markets with 

limited buyers, and immigrant farmers. 

Agricultural advocacy organizations 

recommended the definition of market 

vulnerable individual explicitly 

include, but not be limited to, race, 

color, national origin, religion, sex, 

sexual orientation, disability, age, 

marital status, family or parental status, 

income derived from a public assistance 

program, political beliefs, or gender 

identity. Commenters asserted 

individuals in each of these groups 

should not have to continually prove 

discrimination and prejudice against 

them based on the characteristic that 

makes them vulnerable in the market. 

Agricultural advocacy organizations 

expressed support for including 

cooperatives in the prohibited bases 

under proposed § 201.304. These 

commenters recommended that AMS 

explain in the preamble to the final rule 

the relationship between the producer 

association protections under the 

Agricultural Fair Practices Act and the 

proposed new protections under the 

Act, noting regulated entities have 

unjustly discriminated against covered 

producers based on their membership in 

these cooperatives due to the increased 

market leverage these cooperatives or 

other producer associations provide. 

An individual commenter urged AMS 

to explicitly prohibit discrimination 

based on sexual orientation and gender 

identity for those who voluntarily 

disclose such status. The commenter 


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170U.S. Department of Justice, Civil Rights 

Division, Title VI Legal Manual, 5. See also Price 

Waterhouse v. Hopkins, 490 U.S. 228, 271 (1989) 

(‘‘[D]irect evidence of intentional discrimination is 

hard to come by.’’). 

171See Impax Labs., Inc. v. Fed. Trade Comm’n, 

994 F.3d 484, 497–500 (5th Cir. 2021); McDonnell 

Douglas Corp. v. Green, 411 U.S. 792 (1973). 

172Reinstatement of HUD’s Discriminatory Effects 

Standard, 86 FR 33590, June 25, 2021 (to be 

codified at 24 CFR part 100). 

173According to the commenter: ‘‘A group whose 

members have been subjected to racial or ethnic 

prejudice because of their identity as members of 

a group without regard to their individual 

qualities.’’ 

174Matthew C. Weinberg et al., ‘‘Buyer Power in 

the Beef Industry,’’ https://equitablegrowth.org/ 

grants/buyer-power-in-the-beef-industry. 

stressed AMS should not require 

LGBTQ producers to disclose their 

sexual orientation or gender identity in 

conducting business, citing privacy, and 

security concerns. Other commenters 

noted sexual orientation is different 

from gender identity, so both should be 

listed individually in the rule. 

Some agricultural and environmental 

advocacy organizations expressed 

support for AMS’s flexible ‘‘market 

vulnerable individual’’ approach, but 

also expressed concern that the 

proposed rule would impose a difficult 

burden of proof on covered producers, 

requiring, for example, a producer 

alleging discrimination based on their 

status as a member of a historically 

marginalized group (e.g., a racial 

minority) to also demonstrate their 

status as a market vulnerable individual 

‘‘in relevant markets.’’ Commenters 

indicated producers should not have to 

continually prove they are being 

discriminated against if they are 

members of a protected class or qualify 

as a market vulnerable individual. 

These commenters urged AMS to clarify 

the Act directly prohibits discrimination 

based on protected class status and to 

provide producers with guidance on 

how to demonstrate their market 

vulnerable status. Commenters 

recommended that AMS include in 

§ 201.304 a non-exhaustive list of factors 

covered producers can rely on to 

demonstrate their market vulnerable 

status. 

Similarly, agricultural advocacy 

groups recommended that AMS clearly 

identify the types of individuals the 

agency would consider to be market 

vulnerable, and the methodology AMS 

will use to make this determination. A 

commenter specified producers who 

derive a substantial percentage of their 

income from their livestock or poultry 

operation are more vulnerable to unjust 

practices than those who derive a small 

percentage of their income from those 

operations. A commenter suggested that 

AMS develop a method to assess 

regional concentration levels using 

information regarding market share, 

Herfindahl-Hirschman index, and price 

reporting systems to allow producers to 

show they operate in a region that 

qualifies them as market vulnerable 

individuals. 

An organization urged AMS to revise 

proposed § 201.304(a)(1) to clarify that 

the rule bans discriminatory conduct 

based on disparate treatment or 

disparate impact, not just 

discriminatory intent. According to the 

commenter, while secs. 202(a) and (b) of 

the Act clearly establish that the 

determinative factor for whether 

conduct constitutes a violation is its 

purpose or effects, the proposed 

language in § 201.304(a)(1) potentially 

requires a covered producer to prove 

discriminatory intent. The commenter 

said that, by describing prohibited 

conduct using the verb forms of 

‘‘prejudice,’’ ‘‘disadvantage,’’ ‘‘inhibit 

market access,’’ and ‘‘take adverse 

action,’’ this language suggests the 

proposed rule would only prohibit 

actions motivated by a prohibited basis. 

Therefore, the commenter 

recommended that AMS revise this 

section to use language that parallels the 

text of sects. 202(a) and (b) in clearly 

distinguishing the actions of regulated 

entities from their discriminatory nature 

or effects. 

Some commenters who supported 

AMS’s market vulnerable producer 

approach expressed concern that the 

proposed rule could place a heavy 

burden on producers to establish an 

intentional discrimination claim based 

on market vulnerable status, citing the 

DOJ, among others, in noting that 

successfully showing discriminatory 

intent can be extremely difficult.170

According to the commenters, 

producers would have evidence of 

differential treatment, but they would 

not likely have evidence to show they 

were subject to adverse treatment 

because of their status as market 

vulnerable individuals. Therefore, these 

commenters urged AMS to require 

regulated entities to rebut a 

presumption of discriminatory intent 

once a producer demonstrates 

differential treatment. Specifically, the 

commenters recommended the final rule 

include provisions clarifying that, to 

prove an unlawful violation of 

§ 201.304(a), producers must 

demonstrate that they meet the 

definition of a ‘‘market vulnerable 

individual’’ or are a member of a 

protected class, and that they were 

personally subject to disparate and 

adverse treatment. One commenter also 

said producers’ burden here should 

include showing circumstantial facts 

plausibly suggesting a causal connection 

between their group identity and the 

treatment they received. The burden 

would then shift to the regulated entity 

to show that the producer’s marketvulnerable status was not a motivating 

factor for its presumptively 

discriminatory conduct, and the same 

decision would have been made 

regardless of the producer’s market 

vulnerable status. The commenters cited 

case law in asserting this burdenshifting approach is consistent with 

other antitrust and civil rights 

evidentiary frameworks developed by 

the courts to reduce the burden of 

proving discriminatory intent.171

A commenter also asked AMS to 

establish a separate liability standard 

and burden-shifting framework for 

discriminatory-effects claims. The 

commenter said AMS should introduce 

a framework analogous to the 

Department of Housing and Urban 

Development’s (HUD) Discriminatory 

Effects Standard,172 under which a 

covered producer would have the initial 

burden of demonstrating that a 

regulated entity’s policy or practice 

causes or predictably will cause a 

discriminatory effect. The commenter 

said the burden should then shift to the 

regulated entity to show that the 

challenged practice is necessary to 

achieve a substantial, legitimate, and 

nondiscriminatory interest which could 

not be served by another practice with 

a less discriminatory effect. The 

commenter also provided further details 

about what would constitute a 

discriminatory effect or a legitimate 

interest under this standard. 

A plant worker offered three factors to 

consider when determining marketvulnerable groups. These factors 

included being a member of any 

‘‘socially disadvantaged group’’ as 

defined by the USDA Farm Bill,173

working for a small producer (no formal 

definition of ‘‘small producers’’ was 

offered), or being in geographic areas 

with an ‘‘ultra-high’’ concentration of 

buyers that leads to increased buyer 

market power and reduced prices paid 

to producers.174

Some commenters expressed 

opposition to the proposed definition of 

market vulnerable individual on the 

basis that it was too vague. An 

association asserted the definition is ‘‘so 

vague that neither party may be able to 

figure out whether the contract grower 

is indeed a ‘market vulnerable 

individual.’ ’’ Commenters said the 

proposed definition implicates the Due 

Process Clause, with commenters saying 

the definition as drafted is so openVerDate Sep<11>2014 18:38 Mar 05, 2024 Jkt 262001 PO 00000 Frm 00044 Fmt 4701 Sfmt 4700 E:\FR\FM\06MRR2.SGM 06MRR2

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175 15 U.S.C. 1691c(a)(5). 

176Packers and Stockyards. Act, 1921. Packers 

and Stockyards. Act, 1921 (Aug. 15, 1921, ch. 64, 

title I, § 1, 42 Stat. 159.) Section 407. 

177USDA’s Statement on Conducted Programs, 

accessed 1/30/2024. 

ended that it could potentially include 

any producer, thus giving processors 

inadequate notice of when they might 

be in danger of violating the proposed 

rule. Commenters suggested AMS 

intends for courts to flesh out the 

specifics on who the rule covers, noting 

this approach would lead to more 

uncertainty and confusion. Commenters 

also said the definition is vague because 

it incorporates inherently subjective 

concepts, such as whether a producer is 

a member of a group ‘‘whose members 

are at heightened risk of adverse 

treatment.’’ Commenters questioned 

what amount of risk constitutes 

‘‘heightened risk.’’ 

Two cattle industry trade associations 

and a live poultry dealer contended that 

the ambiguity of the definition would 

create uncertainty for regulated entities 

when making market vulnerable-status 

determinations on a case-by-case basis, 

which could disincentivize bringing on 

new producers in the future. They 

argued that AMS could avoid this 

uncertainty if it introduced codified 

standards based on consistent 

immutable traits, such as protected 

classes. 

Some commenters were opposed to 

explicitly including protected classes in 

the definition. A meat industry trade 

association noted that it can be difficult 

or impossible for regulated entities to 

ascertain all the demographic 

information for every producer they do 

business with to determine whether the 

producer they are contracting with is in 

a protected class and thus a market 

vulnerable individual. An agricultural 

association noted that regulated entities 

soliciting such demographic 

information could in and of itself give 

the appearance of discriminatory 

behavior. 

Lastly, some commenters opposed the 

market vulnerable individual definition 

because they thought it would be too 

limiting. Two farm bureaus argued that 

it would create uncertainty for 

producers who do not meet the 

definition, and that protections should 

be available for anyone participating in 

the marketing of livestock. Other farm 

bureaus also suggested that market 

vulnerable individual be defined solely 

by economic factors, rather than social 

factors, to be consistent with the 

objectives of the Act. 

AMS Response: AMS, in response to 

these comments, has decided not to use 

market vulnerable individual as the 

basis for the rule’s prohibition on 

discrimination or undue or 

unreasonable prejudicial or 

disadvantageous action. AMS agrees 

that the term MVI may be too vague, 

ambiguous, and overly broad to serve as 

the prohibited basis for undue or 

unreasonable prejudice. Instead, this 

rule uses protected classes largely as 

defined by ECOA, plus disability and 

status as a cooperative, as the bases 

against which unjust discrimination or 

undue prejudice is prohibited because, 

as explained above in Section VI— 

Provisions of the Final Rule, this 

regulation incorporates the ECOA terms 

with respect to discrimination in the 

extension of credit because those terms 

reflect USDA policy against 

discrimination in conducted 

programs.175 Protections against 

discrimination on these protected bases 

extend to all producers. AMS, 

incorporating feedback from producers 

and other stakeholders, decided to 

create its protected bases on the wellestablished ECOA standards, with some 

additions. Regarding the commenter’s 

concern that regulated entities may not 

be aware of the demographic 

information of producers with whom 

they conduct business, in such cases 

AMS would not be able to prove 

discriminatory conduct because any 

adverse action taken against that 

producer could not have been on the 

basis of their status as a protected class. 

AMS adopted several suggestions by 

commenters regarding the specific bases 

for protection against unjust 

discrimination. Principally, AMS’s 

authority to clarify the protected bases 

stems from sec. 407 of the Act, which 

authorizes the Secretary to ‘‘make such 

rules, regulations and prescribed orders 

as may be necessary to carry out the 

provisions of this Act.’’ 176 The Act has 

incorporated provisions of other law 

(such as the FTC Act and the Clayton 

Act). The Act is a remedial statute that 

prohibits unlawful discrimination. To 

inform the scope and bases of unlawful 

discrimination and prejudice under the 

Act in this rulemaking, AMS has looked 

to other civil rights laws, which aid in 

determining the scope of discrimination 

and prejudice that is unjust and undue. 

AMS concludes here that discrimination 

and prejudice on the bases set forth 

under this final rule inhibit the ability 

of all to participate in the market, and 

that the clarifications set forth in this 

final rule are necessary to protect all 

market participants from unjust 

discrimination and undue prejudice. 

Furthermore, AMS has considered 

available relevant references to support 

the determination. These include 

USDA’s Statement on Conducted 

Programs 177 and evidence of a general 

congressional policy found in ECOA 

that prohibits discrimination on the 

bases of race, color, religion, national 

origin, sex (including sexual orientation 

and gender identity), marital status, age, 

or disability. Additionally, AMS is 

including status of a covered producer 

as a cooperative as a prohibited basis of 

discrimination because Congress, 

through passage of the Capper-Volstead 

Act, has provided clear statutory 

support for cooperatives as an 

organizational form that allows farmers 

to achieve scale through coordination 

and thereby more effectively compete in 

agricultural markets and engage with 

other market participants. AMS is 

adopting the aforementioned specific 

bases, as opposed to MVI, because the 

specific prohibited bases offer clearer, 

more workable standards that will 

facilitate compliance by regulated 

entities and better enable producers to 

exercise their rights under the Act. 

The use of those terms comes with 

well-established jurisprudence in other 

contexts, such as ECOA, which 

incorporates the Act’s enforcement 

provisions, appropriately applied in the 

context of livestock and poultry 

markets. Additionally, the status of 

covered producer as a cooperative was 

added to the list of protected classes 

against which discrimination is 

prohibited. The prohibition on 

discrimination covers cooperatives 

consistent with and in furtherance of 

the Agricultural Fair Practices Act. 

Cooperatives enable smaller producers’ 

ability to balance concentrated 

economic power through their ability to 

coordinate and negotiate. 

AMS will not include degrees of 

market concentration within particular 

geographic locations in its list of 

protected bases. Doing so would give 

rise to difficult questions around 

whether the government should restrict 

the ability of regulated entities to seek 

efficiency based on production volume, 

which is outside of the scope of this 

rule. 

Additionally, AMS will not include in 

its list of protected bases a size 

component for the same reasons that it 

is not incorporating market 

concentration or geographic location. 

Nor is AMS including a prohibition 

against discrimination in markets with 

limited buyers. In both cases, such a 

prohibition would likely result in an allencompassing rule that would swallow 

this rule’s intent to protect specific wellestablished classes and activities which 

are widely utilized across multiple 


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178Bostock v. Clayton County, 140 S. Ct. 1731 

(2020). 

economic and civil rights regulatory 

regimes to stop market exclusion and 

enable producers to realize the full 

value of their animals. AMS 

underscores that the agency is aware of 

and sensitive to the concerns that 

smaller producers face greater 

challenges in the face of concentrated 

markets, where, as commenters 

suggested, small rural farms are at a 

disadvantage when competing with 

larger operations in their sale of 

livestock to a limited number of 

packers. 

In this rule, AMS does not address 

questions of discrimination based on the 

type of contract a producer has with a 

regulated entity for the sale of their 

livestock. Considerations raised in that 

type of discrimination, revolving around 

how livestock is marketed, are different 

from the considerations undertaken in 

this rule around whether the producer’s 

personal characteristics are a prohibited 

basis of unjust discrimination. 

Nonetheless, AMS is aware that some 

producers may be under pressure to 

enter forward contacts or AMAs and 

that this may limit their access to 

markets. AMS is considering other rules 

that may be more appropriate for 

addressing those concerns. 

Additionally, AMS intends for nonEnglish-speaking producers and 

immigrant producers to be covered 

under the prohibition on discrimination 

on the basis of national origin or, in 

some cases, race if they are facing 

discrimination on those bases. 

Therefore, AMS need not expressly 

include non-English speaking producers 

in this rule. However, people with 

limited education are not included as 

protected bases because enforcement of 

such discrimination offers certain 

practical challenges and is not well 

defined in other areas of law. 

In this final rule, AMS has expressly 

prohibited discrimination based on 

sexual orientation by adding that term 

as well as gender identity to the 

prohibited basis of sex. The Supreme 

Court in Bostock v. Clayton County 

recognized that to discriminate against a 

person based on sexual orientation or 

transgender status is to discriminate 

against that individual based on sex.178

AMS has included the term sex as part 

of its prohibition on discrimination. By 

expressly adding ‘‘including sexual 

orientation and gender identity’’ to the 

rule text, AMS confirms that sex 

includes those forms of discrimination. 

Therefore, sexual orientation and 

transgender status are covered. 

Nor is disclosure a requirement for 

discrimination based on sex. If a 

regulated entity takes adverse action 

that amounts to undue prejudice against 

a person on the basis of sex, it is 

immaterial whether the decision is 

based on an accurate or inaccurate 

assessment of the actual gender or 

sexual orientation of the covered 

producer. In either instance, this 

prejudice is undue under the regulation. 

In terms of concerns raised by 

commenters about the burden to 

establish a claim, producers will not 

have to prove their status as a market 

vulnerable individual as originally 

proposed as the bases of discrimination 

are now based on discrete types of 

protected classes. Therefore, as 

suggested by commenters responding to 

the proposed rule, AMS does not need 

to provide a non-exhaustive list of 

factors for covered producers to 

demonstrate their market vulnerable 

status. 

Furthermore, because market 

vulnerability is no longer a 

consideration when assessing violative 

conduct, AMS is not using market 

vulnerability as a basis for assessing 

whether unjust discrimination has 

occurred in violation of the Act. As 

noted above, this final rule will not 

address discrimination on the basis of 

geographical location, regional 

concentration, or size of a producer’s 

operation because this rule is focused 

on prohibiting adverse actions on bases 

for which there are no pro-competitive 

benefits. Differences in treatment based 

on geographic location, regional 

concentration, or size of the producer’s 

operation all raise more challenging 

tradeoffs with respect to competitive 

benefits. To the extent that a covered 

producer suffers discrimination on 

those bases, AMS encourages the 

covered producer to report the concern 

to PSD, including through the tips and 

complaints portal farmerfairness.gov, 

for consideration on a case-by-case basis 

under the Act. 

AMS is not establishing a formal 

burden-shifting framework in this rule, 

nor one specifically focused on 

discriminatory effects such as an 

analysis of disparate impact. Rather, 

AMS will leave the development of 

evidentiary proof to the facts and 

circumstances of specific cases and to 

the tribunals’ processes and burdens for 

producing evidence. AMS has 

investigatory and enforcement 

capabilities to determine whether 

violative conduct has occurred under 

the Act. AMS’s investigative powers are 

extensive and include the ability to 

examine regulated entities’ records and 

compel testimony. AMS may investigate 

to determine whether a regulated 

entity’s disparate treatment of a 

producer was on the basis of a protected 

class as specified in this regulation. 

Moreover, as described in Section V— 

Changes from the Proposed Rule, 

subsection D—Retaliation Provisions, 

AMS changed ‘‘because of’’ to ‘‘based 

upon.’’ Paragraph (b)(1)’s prohibition as 

‘‘based upon’’ is intended to be broader 

than ‘‘but for’’ causation and so capture 

when the protected characteristics or 

status are a material, or non-trivial, 

element of the decision to take an 

adverse action against a covered 

producer. AMS expects that fact-finding 

tribunals will establish the necessary 

processes for proving these elements, 

with an eye toward the protections for 

covered producers and for open, 

inclusive markets that this rule is 

designed to provide. AMS underscores 

that discriminatory intent is not an 

element of this final rule and need not 

be shown to establish a violation, for 

example, where the regulated entity 

cannot proffer a non-discriminatory 

business reason that fully justifies the 

adverse action, or where the producer 

can show that such reason offered was 

pretextual, a sham, or otherwise does 

not negate the presence of the 

prohibited bases as a material element 

of the action. 

Comment: An academic institution 

expressed support for AMS’s efforts to 

protect historically disadvantaged 

groups within the stockyard and 

packing industries but suggested it may 

be more effective to address the barriers 

to entry these groups face related to the 

specialized education and training 

required by these industries. The 

commenter recommended that AMS 

make agricultural and industry-specific 

training and education more accessible 

to minority populations. 

AMS Response: This rule is designed 

to strengthen the regulatory protections 

afforded to producers by the Act. AMS 

intends to conduct education and 

outreach to producers to help them 

understand their rights under these acts. 

Additionally, greater access to 

specialized training and education 

could be helpful to stopping market 

exclusion of underserved producers. 

AMS and other USDA agencies conduct 

a range of programs to support producer 

education, with the goal of remedying 

market exclusion of underserved 

producers. However, providing 

specialized training oriented toward 

enabling members of historically 

disadvantaged groups to become more 

effective livestock producers is outside 

the scope of this rulemaking. 


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179 85 FR 79779, December 11, 2020. 

180 85 FR 1771. 

181 Montclair v. Ramsdell, 107 U.S. 147, 152 

(1883) (Courts should ‘‘give effect, if possible, to 

every clause and word of a statute, avoiding, if it 

may be, any construction which implies that the 

legislature was ignorant of the meaning of the 

language it employed’’). 

182 85 FR 79787. 

183USDA, Agricultural Marketing Service, 

‘‘Frequently Asked Questions on the Enforcement 

of Undue and Unreasonable Preferences under the 

Packers and Stockyards Act,’’ August 2021, https:// 

www.ams.usda.gov/rules-regulations/packers-andstockyards-act/faq. 

ii. Proposed Rule Is Unnecessary 

Comment: Several industry 

associations contended the proposed 

rule is duplicative and therefore not 

necessary. According to these 

commenters, the conduct addressed in 

the proposed rule is already prohibited 

under the Act and existing regulations, 

citing the ‘‘Undue and Unreasonable 

Preferences and Advantages Under the 

Packers and Stockyard Act’’ final rule 

(the 2020 Rule).179 The commenters 

explained the 2020 Rule identifies 

factors for determining whether 

disparate treatment of similarly situated 

producers is justified. If the disparate 

treatment is not justified, it is likely to 

be deemed an undue or unreasonable 

preference. Commenters noted the 

proposed rule would prohibit several 

forms of disparate treatment of covered 

individuals, indicating proposed 

§ 201.304(a)(2) would make it a 

violation for a regulated entity, in 

dealings with covered producers, to 

prejudice, disadvantage, inhibit market 

access, or otherwise take adverse action. 

Examples of prejudice or disadvantage 

specified in the proposed rule include 

offering less favorable contract terms 

than are customarily offered; refusing to 

deal; differential contract performance 

or enforcement; or termination or nonrenewal of a contract. According to the 

commenters, these actions are already 

prohibited under § 201.211 because they 

are not justified based on cost savings, 

based on meeting a competitor’s terms, 

or as a business decision. 

An industry association asserted 

establishing antidiscrimination law 

under the proposed rule is unnecessary 

because civil rights laws already are 

well-established. The commenter also 

contended the proposed rule would not 

address the market inequities faced by 

producers not included in the protected 

classes, and the vague proposed 

definition of market vulnerable 

individual would likely result in 

litigation creating additional hardship 

for the individuals the rule seeks to 

protect. 

An individual indicated the proposed 

rule would not be effective in 

addressing prejudices or threats of 

prejudice in the marketplace and 

instead recommended AMS take action 

to create more packers, which would 

facilitate greater market access. 

AMS Response: AMS agrees with the 

commenters that the conduct at issue is 

prohibited under the Act and, in some 

circumstances, could be enforceable 

under existing rules and regulations. 

However, AMS disagrees with 

commenters who said this rule is 

duplicative of the 2020 Rule. In 

response to the proposed rulemaking 

that preceded the 2020 Rule,180 AMS 

received numerous comments raising 

concerns regarding discriminatory and 

retaliatory practices; however, AMS 

stated that the 2020 Rule was published 

for the narrow purpose of establishing 

criteria to consider when assessing 

whether a violation of sec. 202(b)’s 

prohibition against undue preferences 

or unreasonable advantages occurred. 

The 2020 Rule established four 

criteria the Secretary will consider 

when determining whether conduct by 

packers, swine contractors or live 

poultry dealers represents an undue or 

unreasonable preference or advantage. 

Those criteria include whether the 

preference or advantage cannot be 

justified on the basis of a cost savings 

related to dealing with different 

producers, sellers, or growers; cannot be 

justified on the basis of meeting a 

competitor’s prices; cannot be justified 

on the basis of meeting other terms 

offered by a competitor; and cannot be 

justified as a reasonable business 

decision. However, as set forth in the 

rule itself, the criteria are not exhaustive 

and not determinative. The rule offers 

limited guidance regarding how it is to 

be applied. 

The 2020 Rule did not include the 

prohibited bases of discrimination set 

forth in this rule because it asserted that 

they were undue prejudices, rather than 

undue preferences, which are distinct 

prohibitions in the statutory text.181

Specifically, the 2020 Rule’s preamble 

noted that discrimination on the basis of 

race, gender, and other such protected 

bases was unlawful and would be 

addressed under the Act’s prohibition 

against undue prejudices.182 In August 

2021, AMS reiterated this policy in a 

series of Frequently Asked Questions 

(FAQs).183 This final rule affirms that 

approach, in that the 2020 Rule clarifies 

undue preference while this rule 

clarifies undue prejudice. Moreover, 

this rule provides clarity, specificity, 

and certainty in the application of the 

Act, which will facilitate compliance 

and enforcement by regulated entities 

and better inform covered producers of 

their protections under the Act. 

AMS is not aware of a separate 

Federal law or rule that would cover the 

circumstances outlined in this final 

rule. This rule sets forth how certain 

adverse actions by regulated entities 

give rise to unjust discrimination and 

prejudice that, on their face, are unjust 

and undue and undermine a 

competitive market. This rule addresses 

the unique and often difficult-to-prove 

discriminatory conduct that has long 

existed in the agricultural sector by 

prohibiting specific bases of prejudicial 

action. In doing so, AMS is clarifying 

the application of the Act, better 

empowering producers to protect 

themselves, and encouraging companies 

to adopt more robust compliance 

practices to snuff out prohibited 

conduct prohibited by the Act in its 

incipiency, before, in the aggregate, it 

can distort markets. In particular, this 

rule addresses the longstanding and 

often difficult-to-counter forms of 

exclusion that have plagued the 

agricultural sector for decades. AMS 

intends for this rule to support positive 

trends toward inclusivity in the 

marketplace. As noted above, all 

commenters, including industry 

commenters, affirmed that prejudices on 

the basis of race, color, religion, national 

origin, sex, age, disability, and similar 

bases have no place in today’s modern 

agricultural markets. 

Demographic information is seldom 

recorded in agricultural transactions; 

therefore, it is difficult to quantify 

discrimination, unlike in other sectors 

such as housing and banking. 

Furthermore, in highly concentrated 

agricultural markets with few minority 

participants, further defining the Act to 

include a list of prohibited bases of 

unjust discrimination helps ensure fair 

competition for all farmers. This rule 

will help all producers better 

understand their rights under the law 

and come forward when they recognize 

instances of unjust discrimination. This 

rule will help USDA to better enforce 

the Act. In addition, as AMS has 

determined not to use the market 

vulnerable individual approach in the 

final rule, commenter concerns that the 

definition for market vulnerable 

individual will lead to litigation are 

moot. 

AMS acknowledges one commenter’s 

recommendation that AMS take action 

to reduce concentration in the 

meatpacking industry and create more 

packers, with the goal of facilitating 

greater market access for livestock and 

poultry operations. This 

recommendation was made out of 

skepticism that the rule would change 


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16138 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

conduct by regulated entities and 

substantially enhance market access for 

covered producers. While not directly 

addressing this specific 

recommendation, AMS is including a 

recordkeeping requirement to support 

evaluation of regulated entity 

compliance and thus facilitate effective 

enforcement of the statute. The USDA 

has also taken a number of steps to 

support small meat processors, 

including through hundreds of millions 

of dollars invested to support 

competition in the processing market. 

iii. Specific Challenges or Burdens 

Regulated Entities May Face in 

Complying With Proposed Undue 

Prejudices Provisions 

AMS asked about specific challenges 

or burdens regulated entities may face 

in complying with the undue prejudice 

provisions of the proposed rule. It also 

requested comment on how the undue 

prejudices provisions differ from 

existing policies, procedures, and 

practices of regulated entities. 

Comment: Industry commenters said 

the vague terms in the proposed rule 

present an additional challenge for 

compliance. Commenters cited 

unclearly defined terms such as ‘‘inhibit 

market access’’ and ‘‘adverse action,’’ 

saying they make it impossible for 

regulated entities to determine what 

constitutes a violation and how to 

comply with the proposed regulations. 

Similarly, commenters noted it is not 

clear how the regulated entity would 

determine whether contract terms are 

‘‘less favorable,’’ or how contracts 

executed at different times, in different 

regions, or in different economic 

conditions would be compared. 

AMS Response: ‘‘Inhibit market 

access’’ means excluding producers 

from livestock and poultry markets 

outright or erecting barriers to market 

access that prevent producers from 

earning the full value of their animals. 

AMS rejects the need to define ‘‘adverse 

action’’ because this would too greatly 

constrain the application of the 

regulation. Based on its regulatory 

experience, AMS believes regulated 

entities are fully aware of when their 

economic interactions with covered 

producers, including contracting, the 

operation of contracts, termination of 

contracts, or refusing to deal, result in 

adverse economic outcomes for 

producers. However, to provide greater 

clarity, the final rule provides greater 

specificity with respect to prohibited 

actions as set forth in § 201.304(a)(2), as 

described earlier. 

The scope of prohibited conduct 

regarding adverse actions is clarified by 

the shift from market vulnerable 

individual to membership in a protected 

class as the prohibited bases of unjust 

discrimination; the focus of the inquiry 

should be on those bases. If a regulated 

entity offers a covered producer less 

favorable contract terms principally or 

substantially because the covered 

producer belonged to one of the 

protected classes, it violates the law and 

this rule. 

iv. Sufficient Addressing of Concerns 

Regarding Tribal Members, Tribes, and 

Tribal Government Entities That 

Sponsor or Manage Regulated Entities 

AMS requested comment on whether 

the provisions on undue prejudice 

adequately address concerns regarding 

inequitable market access for Tribal 

members and Tribes. It also requested 

comment on how it should handle 

Tribal government entities that sponsor 

or manage regulated entities. AMS 

asked whether it should permit 

compliance with proposed § 201.304(a) 

to be substituted for compliance with 

Tribal government rules, policies, or 

guidance governing equitable market 

access. 

Comment: Commenters urged AMS to 

consult with Tribal organizations 

engaged in agricultural policy and 

livestock production projects, such as 

the Intertribal Agricultural Council and 

the Native Farm Bill Coalition. 

AMS Response: AMS engaged in an 

extensive Tribal Consultation pursuant 

to USDA and Federal treaties governing 

U.S. relations with Indian Tribes. AMS’s 

principal conclusion was that Tribal 

governments have important duties to 

serve their members that may require 

them to treat non-Tribal members less 

favorably. Accordingly, AMS has 

established a legitimate business 

justification as an exception to the 

prohibition of unjust discrimination 

against covered producers on the bases 

of protected classes (race, color, 

religion, national origin, sex (including 

sexual orientation and gender identity), 

disability, marital status, age of the 

covered producer or the covered 

producer’s status as a cooperative) when 

the regulated entity is a Federallyrecognized Tribe, including its wholly 

or majority-owned entities, 

corporations, or Tribal organizations, 

that is performing Tribal governmental 

functions. The agency describes its 

rationale for creating this exception in 

greater detail above, as well as below 

under the Tribal Consultation section. 

v. Treatment of Private Industry 

Programs Aimed at Establishing 

Preferences Intended To Address 

Systemic Inequality 

AMS requested comment related to 

private industry programs aimed at 

establishing preferences intended to 

address systemic inequality by 

partnering with Black producers or 

similar programs designed to address 

socially inclusive supply chains. It 

asked whether, if such programs were 

present in livestock and poultry 

markets, it should evaluate them and 

determine them to be undue preferences 

pursuant to the criteria in 9 CFR 

201.211. It also requested suggestions on 

ways to address relevant concerns. 

Comment: Agricultural advocacy 

organizations indicated this question 

relates to what is considered an 

‘‘undue’’ preference. The commenters 

noted a program, practice, or policy that 

provides opportunities to producers 

who have been vulnerable to unfair 

market practices in the past may be a 

justified form of preference rather than 

an undue preference. 

AMS Response: AMS takes note of the 

commenters’ belief that a justified 

preference would likely apply in those 

circumstances and that this rule governs 

undue or unreasonable prejudices or 

disadvantages. As discussed above, the 

2020 Rule establishes criteria for the 

Secretary to consider when assessing 

whether a preference is undue. To the 

extent that there may be situations 

where the 2020 Rule and this final rule 

would arguably both apply, AMS would 

take a facts-and-circumstances approach 

to decide which rule applies. 

Accordingly, AMS makes no change. 

vi. Appropriateness of Proposed Rule’s 

Protection for Cooperatives 

AMS requested comment on whether 

the proposed regulation would provide 

appropriate protection for cooperatives, 

particularly with respect to the fact that 

their structure and organization varies 

across livestock and poultry markets. 

Comment: A group of State attorneys 

general and an academic institution 

expressed support for the proposed 

protection for cooperatives, noting these 

protections will ensure small farmers 

can continue to compete in the market. 

Agricultural advocacy organizations 

recommended AMS revise the reference 

to ‘‘cooperative’’ in proposed 

§ 201.304(a)(1) to refer to ‘‘cooperatives 

or other association of producers’’ 

because many producer associations 

designed to give covered producers 

more leverage in the market are not 

structured as cooperatives, noting this 

recommended change is consistent with 


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184 7 U.S.C. 2302(2). 

185Final Rule, ‘‘Cattle Contract Library Pilot 

Program,’’ Agricultural Marketing Services, 

December 2022, 87 FR 74951. For more 

information, see also Agricultural Marketing 

Service, Cattle Contract Library Pilot, at https://

www.ams.usda.gov/market-news/livestock-poultrygrain/cattle-contracts-library (last accessed Dec. 

2023). Note, as of the date of publication of the Pilot 

in January 2023, no covered packers reported to 

AMS contract specifications with financing, risksharing, or profit-sharing. 

186Agricultural Marketing Service, Swine 

Contract Library Information, at https://

www.ams.usda.gov/rules-regulations/packers-andstockyards-act/regulated-entities/swine-contractlibrary (last accessed Dec. 2023). 

the producer association definitions 

related to the protections provided in 

the Agricultural Fair Practices Act.184

AMS Response: AMS has included 

cooperatives as a class protected against 

prejudice or unjust discrimination 

because cooperatives are an important 

tool for smaller producers to countervail 

the market power of regulated entities, 

whether due to market concentration or 

the inherent power imbalance that 

exists in livestock supply chains 

between a small number of processors 

and a much larger number of producers. 

This inclusion of cooperatives as a 

protected class reaffirms the strong 

statutory authority Congress has 

provided cooperatives in agricultural 

markets, as manifested by its passage in 

of the Capper-Volstead Act, which 

permits producer cooperatives to 

collectively process, prepare for market, 

handle, and market their products. 

Adverse treatment at the hands of a 

regulated entity based on a grower 

exercising their right to join such an 

organization, including a cooperative or 

an association, is the exact conduct this 

provision addresses. However, the 

prohibition of regulated entities 

prejudicing a cooperative focuses on the 

cooperative’s market interactions with 

the regulated entity compared to entities 

that are not cooperatives, and not on the 

formation or association of the 

cooperative itself. 

Collectively, members of cooperatives 

are better able to gain access to markets, 

leverage negotiating power when 

dealing with regulated entities, and 

meet volume demands based on their 

ability to pool outputs. The rule 

supports covered producers in using 

procompetitive cooperatives to their 

fullest extent. This rule aims to ensure 

equal treatment of covered producers by 

regulated entities, regardless of whether 

or not a grower has exercised its right 

to join a grower organization or 

association. For these reasons, AMS has 

not changed § 201.304(a) to include ‘‘or 

other association of producers.’’ 

AMS notes that many producer 

associations are designed to give their 

members certain benefits, including 

some ability to negotiate with regulated 

entities around certain outcomes in the 

market. However, cooperatives are the 

only group of agricultural producers 

with explicit ability to cooperate and 

contract collectively with regulated 

entities, which includes Federal 

antitrust law exemptions not enjoyed by 

other types of associations. Nonetheless, 

AMS notes the importance of covered 

producers forming associations that may 

offer benefits to their members outside 

of collective contracting. To that end, 

the final rule in § 201.304(b)(2)(iii) 

provides important new protections 

against retaliation for forming or joining 

an association. 

D. Specific Actions Constituting 

Prejudice or Disadvantage 

(§ 201.304(a)(2)) 

AMS proposed a non-exhaustive list 

of prejudicial actions that the regulation 

would prohibit, including offering less 

favorable contract terms, refusing to 

deal, differential contract enforcement, 

and contract termination or nonrenewal. 

i. Appropriateness of Specific 

Prejudicial Acts in Proposed 

§ 201.304(a)(2) 

AMS requested comment on the 

appropriateness of the specific 

prejudicial acts in proposed 

§ 201.304(a)(2), as well as whether it 

should include any other forms of 

prejudicial conduct. 

a. Offering Contract Terms Less 

Favorable Than Those Generally or 

Ordinarily Offered 

AMS requested comment on whether 

offering contract terms less favorable 

than those generally or ordinarily 

offered should be considered a specific 

prejudicial or disadvantageous action 

against covered producers. 

Comment: A cattle industry trade 

association and an agricultural advocacy 

organization proposed amending the 

prohibition of offering contract terms 

‘‘less favorable than those generally or 

ordinarily offered’’ to reflect the fact 

that little is known about terms 

contained in forward contracts. They 

noted that it is unclear if the terms of 

forward contracts should be considered 

‘‘generally or ordinarily offered’’ 

because, for example, atypical bonuses 

can be offered to a select number of 

preferred feedlots. If these bonuses are 

rarely offered, they may fall outside of 

the scope of ‘‘generally or ordinarily 

offered,’’ but would still disadvantage 

the other feedlots (market vulnerable 

individuals) that do not receive them. 

The commenters suggested AMS should 

instead compare specific terms of 

individual purchase agreements or 

contracts to determine violations. 

AMS Response: Given the unique 

contract types in the cattle industry, 

AMS recognizes that certain premiums, 

discounts, and bonuses may not be 

‘‘generally or ordinarily’’ offered. In this 

final rule, AMS is preserving the ability 

of regulated entities to be flexible in the 

types of contracts they offer to 

producers, with different producers 

having different contracts based on the 

particular quality and type of service 

provided for in the contract. Whether 

terms are generally or ordinarily offered 

is specific to the facts and 

circumstances of each case, including in 

comparison to similarly situated 

producers—a clarification which the 

final rule establishes. ‘‘Generally or 

ordinarily offered to similarly situated 

producers’’ is a fact-specific inquiry 

which looks to the contracting practices 

of the regulated entity, including how 

the regulated entity contracts for similar 

products or services with similar 

producers. While the rule does not 

guarantee any producer any particular 

contract terms, AMS underscores that 

the purpose of the rule is to prevent an 

adverse action based upon an unlawful 

basis. A refusal to offer a contract term 

based upon the producer’s race, color, 

religion, national origin, sex (including 

sexual orientation and gender identity), 

disability, or marital status, or age 

would weigh heavily in any analysis, as 

it inherently implies that the regulated 

entity is in the market to contract with 

those terms by others in the market. 

Such a circumstance is different than 

refusing to offer a contract because the 

producer is unable to meet special 

contract requirements. 

AMS recognizes the existence of 

information asymmetry between 

regulated entities and covered 

producers, including in relation to what 

contract terms are commonly offered or 

not. AMS notes the availability of other 

tools to address that challenge, 

including new initiatives such as AMS’s 

Cattle Contract Library Pilot, which 

provides disclosure into contract terms 

offered by packers with greater than 5 

percent of the national market share, 

including disclosure of any contract 

specifications on financing, risk-sharing, 

and profit-sharing.185 AMS also operates 

a Swine Contract Library, which 

provides transparency into contract 

terms in the swine sector.186 When in 

doubt, AMS encourages covered 

producers to contact PSD. AMS is 

making no changes to the regulation as 


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proposed in response to these 

comments. 

b. Refusing To Deal 

AMS requested comment on whether 

refusing to deal should be considered a 

specific prejudicial or disadvantageous 

action against covered producers. 

Comment: A cattle industry trade 

association and an agricultural advocacy 

organization recommended including in 

the prohibition on ‘‘refusing to deal’’ 

instances where a producer who 

ordinarily markets their livestock in the 

cash market is denied a bid unless they 

enter a forward contract with the 

regulated entity. 

AMS Response: AMS is aware that 

market concentration in the cattle 

industry has had a negative effect on 

negotiated cash markets and on the 

ranchers who choose to deal exclusively 

in those markets, but the impact of 

thinning cash livestock markets on the 

ability of producers to use cash markets 

and freely enter forward contracts with 

regulated entities is outside the scope of 

this rulemaking. AMS will further 

consider the commenters’ 

recommendations in the context of other 

rulemaking initiatives such as rules 

focused on particular species of 

livestock and evidentiary patterns of 

abusive conduct. AMS is making no 

further changes to the regulation as 

proposed in response to these 

comments. 

c. Other Comments on Appropriateness 

of Specific Prejudicial Acts 

Comment: Two farmers unions and 

several organizations generally 

supported the appropriateness of the list 

of specific prejudicial acts, but also 

recommended adding the phrase 

‘‘including, but not limited to’’ to 

provide flexibility in evaluating future 

acts of discrimination or prejudice. An 

academic institution also endorsed the 

non-exhaustive list of specific actions 

provided in this section, suggesting the 

listed actions would reduce uncertainty 

in the industry and make this section of 

the rule easier to enforce. 

AMS Response: This rule is not 

intended to limit AMS’s ability to 

enforce the Act. Instead, the rule aims 

to better define the Agency’s 

enforcement authority so that 

enforcement actions are more 

successful. AMS agrees with the 

commenters that listing specific 

prohibited prejudicial acts will aid 

enforcement efforts. The agency also 

agrees that such a list is meant to be 

exemplary, not exhaustive. To this end, 

‘‘any other action that a reasonable 

covered producer would find materially 

adverse’’ has been added to 

§ 201.204(a)(2) to indicate that a variety 

of other adverse actions done on a 

prohibited basis against covered 

producers may violate this section. The 

facts and circumstances of each case 

will be assessed in light of these 

provisions when determining whether 

the conduct in question violates the Act. 

Comment: A swine industry trade 

association said that the specific 

‘‘prejudicial or disadvantaging’’ acts 

listed, as well as the proposed rule’s 

intimation that the list is ‘‘nonexhaustive,’’ would result in a vague 

and overbroad definition of prejudicial 

conduct. The commenter argued that 

terms such as ‘‘favorable’’ and 

‘‘generally or ordinarily offered’’ vary 

with market conditions over time and 

would have to be ironed out in courts 

through costly litigation. 

AMS Response: AMS has adequately 

described the type of conduct 

prohibited under this rule by expressly 

stating that undue prejudice and unjust 

discrimination on specified prohibited 

bases constitutes a violation under the 

Act. 

AMS addressed concerns of 

vagueness by further defining conduct 

that is prejudicial or disadvantageous to 

producers in the final rule (as described 

in section V—Changes from the 

Proposed Rule). In particular, AMS has 

made a number of changes to provide 

additional clarity, specificity, and 

certainty to market participants relating 

to the list of adverse actions set forth in 

§ 201.304(a)(2). In response to the 

commenter’s concern that ‘‘generally or 

ordinarily offered’’ is a concept that may 

vary with market conditions over time, 

AMS revised the regulation to state 

‘‘generally or ordinarily offered to 

similarly situated covered producers.’’ 

Including this phrase in the final 

regulations provides more specificity 

with respect to the current market 

context in which the regulation would 

be applicable. Paragraph (a)(2)(vi) was 

added to limit the list to any other 

adverse action that a reasonable covered 

producer would find materially adverse. 

The final rule also adds two exceptions 

to the rule in new paragraph (a)(3), 

which provides further specificity to the 

rule by defining specific actions which 

are not considered prejudicial conduct 

under this rule. 

Nevertheless, AMS reads the statutory 

term ‘‘prejudicial’’ to be a broad term, 

that covers all acts that cause harm to 

covered producers on a prohibited basis 

with respect to livestock, meats, meat 

food products, livestock products in 

unmanufactured form, or live poultry. 

While the term ‘‘prejudicial’’ 

encompasses a broad range of conduct, 

it is not vague. This rule does not 

prohibit all harms that may be inflicted 

on covered producers by regulated 

entities, rather, only those prejudicial 

acts related to livestock, meat and 

poultry that occur on a prohibited basis. 

Comment: A cattle industry trade 

association said AMS should not 

prohibit the specific acts outlined in the 

rule because they are important tools 

that allow the free market to function. 

The commenter suggested that, while 

less favorable terms or contract 

terminations are unfavorable results for 

producers that experience them, they 

are important outcomes that incentivize 

producer innovation. If these specific 

acts are prohibited, the trade association 

argued, regulated entities would need to 

resort to ‘‘vanilla’’ standardized 

contracts that would degrade consumer 

outcomes and impair superior 

producers’ profit opportunities. 

AMS Response: AMS rejects the 

argument that discrimination on the 

basis of race, color, religion, national 

origin, sex (including sexual orientation 

and gender identity), disability, marital 

status, age of the covered producer, or 

the covered producer’s status as a 

cooperative, or retaliation is a free 

market value. Engaging in that unjust 

discriminatory conduct would exclude 

participants from the market, rather 

than encourage them. 

Moreover, the members of the trade 

association were mistaken even with 

respect to the original proposal 

protecting market vulnerable 

individuals. Regulated entities are free 

to use contracting tools to develop 

incentives. But a tool used to unduly 

prejudice the vulnerable does not 

incentivize; it oppresses. Any other 

conclusion is contrary to the plain 

meaning of the Act. This rule aims to 

create an inclusive, fair, and equal 

environment for farmers and ranchers to 

conduct business by preventing 

instances of unjust discrimination and 

undue prejudice. The key concept here 

is that there shall be no discrimination 

on the protected bases regarding the 

offering of ‘‘general and ordinary’’ 

contract terms. AMS concludes that the 

benefits of protecting farmers and 

ranchers from plainly unjustly 

discriminatory treatment outweigh the 

hypothetical prediction that such 

regulations will hamper efficiency or 

innovation. Inclusive markets breed 

innovation and efficiencies; they do not 

undermine them. 

ii. Additional Forms of Prejudicial 

Conduct To Include 

AMS requested comment on whether 

the four specific prejudicial acts are 

appropriate as proposed, or whether 

there are other forms of prejudicial 


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Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 16141 

187 Implementation of Regulations Required 

Under Title XI of the Food, Conservation and 

Energy Act of 2008; Conduct in Violation of the Act, 

75 FR 35338, 35352, June 22, 2010. 

188See, generally, https://www.afpc.tamu.edu/ 

research/publications/710/cattle.pdf. However, see 

also: https://www.antitrustinstitute.org/workproduct/aai-senior-fellow-peter-carstensenresponds-to-economic-research-on-marketing-ofbeef-cattle-says-it-fails-to-address-market-powerand-buying-methods/. 

189See Agricultural Marketing Service, Cattle 

Contract Library Pilot, available at https://

www.ams.usda.gov/market-news/livestock-poultrygrain/cattle-contracts-library (2023). 

conduct that should be specified. Where 

other specific conduct is identified, 

AMS sought examples of how these 

actions have been used to target market 

vulnerable individuals or cooperatives. 

Comment: An academic or research 

institution proposed adding a new 

specific action that would encompass 

‘‘information disclosure.’’ The 

commenter defined information 

disclosure as failing to provide 

information materially relevant to a 

producer’s operation while providing 

that information to one or more other 

producers. The commenter highlighted 

information asymmetry as a major 

fairness issue in livestock markets and 

suggested such asymmetry can heighten 

monopsony or oligopsony conditions. 

The commenter also cited the former 

Grain Inspection, Packers and 

Stockyards Administration’s (GIPSA’s) 

inclusion of information asymmetry in a 

2010 proposed rule (the 2010 GIPSA 

Rule),187 which defined undue or 

unreasonable prejudice or disadvantage 

as ‘‘whether information regarding 

acquiring, handling, processing, and 

quality of livestock is disclosed to all 

producers when it is disclosed to one or 

more producers.’’ The commenter 

encouraged AMS to use similar 

language in its final rule. 

AMS Response: AMS is concerned 

about the negative impact information 

asymmetry, and the subsequent lack of 

transparency, has on producers. 

Information asymmetry could very well 

be used as a means of unjust 

discrimination if regulated entities 

preference certain producers over others 

through the information they choose to 

disclose. Such selective disclosure of 

information could cause those 

producers from whom information was 

withheld by regulated entities to lose 

out economically to those producers 

that received the information. 

In the final rule, AMS has added 

paragraph (a)(2)(vi) to address any other 

action that a reasonably covered 

producer would find materially adverse. 

If a covered producer can show they are 

materially harmed by information 

asymmetry, they will have a recourse 

under this rule. Additionally, the 

prejudicial act of differential contract 

performance or enforcement 

(§ 204(a)(2)(iii)) covers selective 

information disclosure in many 

circumstances. Withholding materially 

relevant information from a contractee 

that it previously made available to the 

contractee or which it makes generally 

or ordinarily available as part of its 

contract performance to other 

contractees is de facto differential 

contract performance or enforcement. A 

producer is likely to operate in a lessthan-optimal manner regarding financial 

renumeration when the regulated entity 

it is contracting with has withheld 

materially relevant information that has 

been disclosed to other contractees. 

Such behavior will thus lead to 

differential contract performance or 

enforcement. 

AMS has not adopted the wideranging proposal on information 

asymmetry from the 2010 GIPSA Rule 

because it could inhibit the ability for 

regulated entities to select trusted 

partners with whom to engage in more 

complex, value-added production that 

may require specialized cooperation and 

information sharing. 

Addressing information asymmetry 

and improving transparency in 

interactions between covered producers 

and regulated entities is a focus of AMS 

and will continue to be a priority in 

rulemaking. AMS made no further 

changes to the provisions regarding 

undue prejudices in response to this 

comment. 

iii. Different Types of Purchase 

Arrangements That Could Be Employed 

in a Prejudicial Manner 

AMS sought comment on whether 

there are other types of purchase 

agreements (outside of those generally 

or ordinarily offered), such as forward 

contracts, formula contracts, AMAs, or 

cash market purchases, that could be 

used in a prejudicial manner. AMS 

requested identification of these types 

and examples of how they have been 

used to target vulnerable individuals or 

cooperatives. 

Comment: Several commenters argued 

that AMAs are predatory and should be 

prohibited under any name. An 

agricultural advocacy organization said 

that market vulnerable individuals are 

often excluded from participating in 

these agreements and bear negative 

market consequences from this 

exclusion. The individuals suggested 

that a firm base price for covered 

producers should be established 

instead. 

AMS Response: This rule prohibits 

regulated entities from denying covered 

producers access to the purchase or sale 

of livestock on equitable terms, 

including through AMAs, on account of 

one of the rule’s protected bases. AMS 

does not take a position in this rule on 

whether AMAs on principle are unfair 

or anticompetitive as such concerns are 

outside the scope of this rule.188 AMS 

made no further changes in responses to 

the comment. 

iv. Include Other Differential Contract 

Terms 

AMS requested comment on whether 

other differential contract terms not 

listed in the proposed rule should be 

included when defining contract terms 

that are less favorable than those 

generally or ordinarily offered. 

Comment: A cattle industry trade 

association urged AMS to consider three 

additions to differential contract terms: 

1. Bonuses offered to select producers, 

which would disadvantage other 

producers who do not receive bonuses. 

2. ‘‘Cost-sharing.’’ 

3. ‘‘Cost-plus contracts’’ where a 

regulated entity agrees to pay all the 

costs associated with purchasing and 

growing livestock, which disadvantages 

producers who do not receive cost-plus 

contracts. 

AMS Response: This rule addresses 

undue prejudices that can exclude 

covered producers from the 

marketplace. As such, the rule focuses 

on terms that a regulated entity offers 

which are less favorable to those 

generally or ordinarily offered. To the 

extent that a regulated entity generally, 

commonly, or ordinarily offers bonuses, 

cost-sharing, and cost-plus contracts, 

then the denial of those terms to 

covered producers on the grounds of 

belonging to a protected class is covered 

by this rule as forms of differential 

contract terms. It is not, however, 

AMS’s experience that those terms are 

generally, commonly, or ordinarily 

offered to producers, and based on the 

reporting in AMS’s Cattle Contracts 

Library Pilot, are rarely if ever 

offered.189 The rule does not prevent 

regulated entities from offering 

preferences to some producers, in 

particular for reasons relating to their 

choices in types of business 

relationships or how they incentivize 

quality of products or services delivered 

to them. This rule does not take a 

position on whether bonuses, costsharing, and cost-plus contracts may 

give rise to concerns of unfairness, 

undue preferences, or other concerns 

that are outside the scope of this rule. 


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Accordingly, AMS made no change in 

response to this comment. 

v. Include the Action of Offering Less 

Favorable Price Terms, Contract Terms, 

and Other Less Favorable Treatment in 

the Course of Business Dealings 

AMS requested comment on whether 

AMS should include among the 

prejudices the action of offering less 

favorable price terms, contract terms, 

and other less favorable treatment in the 

course of business dealings than those 

generally offered to similarly situated 

producers. 

Comment: A plant worker said AMS 

should avoid evaluating less favorable 

price or contract terms because each 

contract is based on varying 

circumstances that will inevitably result 

in different prices or terms. The 

commenter suggested that evaluating 

differential terms for discrimination will 

hamper regulated entities and 

producers’ ability to bargain or negotiate 

for appropriate contract terms. 

AMS Response: AMS agrees that 

contract prices commonly reflect a range 

of differences in circumstances between 

the contracting parties. To the extent 

that those prices reflect differences in 

product quality or service being 

provided, including transportation and 

delivery, parties are free to set prices in 

contracts as they wish. This rule focuses 

on exclusion or adverse actions on only 

the enumerated prohibited bases. 

Accordingly, AMS made no changes to 

the rule based on the comment. 

vi. Allowance for Offering Less 

Favorable Price Terms, Contract Terms, 

and Other Less Favorable Treatment in 

the Course of Business Dealings for 

Legitimate Business Reasons 

AMS requested comment on whether 

an allowance be made for offering less 

favorable price or contract terms, or 

other less favorable treatment due to 

legitimate business reasons. 

Comment: A cattle industry trade 

association and agricultural advocacy 

organizations argued that legitimate 

business reason defenses should not be 

allowed because it would weaken the 

Act’s purpose and allow continued 

harm to producers. A swine industry 

trade association and an industry 

company argued that exceptions should 

be provided for legitimate business 

reasons, and that AMS should: (1) 

provide clear examples delineating 

between legitimate and illegitimate 

forms of differential treatments, and (2) 

provide clarity on whose burden it is to 

prove that an act meets the legitimate 

business reason exception. The 

company asserted that without such an 

exception there would be frivolous 

litigation where regulated entities 

would have to defend legitimate 

behavior such as canceling contracts 

with producers who are found to have 

animal welfare violations. A plant 

worker agreed that legitimate business 

exceptions should apply, and pointed to 

California employment law’s affirmative 

defense, which serves as a complete 

defense if a policy alleged to cause a 

disparate impact is found to be efficient 

for the business. 

Commenters expressed concern that 

the proposed rule did not define 

legitimate business justification. 

Commenters expressed concern that the 

proposed rule fails to provide the 

industry with specific exceptions or 

justifications for disparate treatment of 

producers, stating there are multiple 

reasons why different (less favorable) 

terms may be offered to certain 

producers and not others, and that these 

reasons are not insidious in nature but 

instead a result of market forces and 

other nondiscriminatory factors. 

Additionally, several poultry industry 

commenters noted that AMS suggests in 

the preamble a legitimate business 

reason may justify disparate treatment, 

yet it never explains what constitutes a 

legitimate business reason. Several 

poultry industry commenters provided 

examples of reasonable business 

decisions that would result in 

differential treatment and may violate 

the proposed rule as written despite 

their reasonableness. These commenters 

urged AMS to add regulatory text 

similar to that in § 201.211 to expressly 

protect reasonable business conduct and 

specify how a company would 

demonstrate that an action was based on 

a reasonable business decision. The 

commenters also said that, due to the 

complicated nature of business 

relationships, business decisions should 

be presumed reasonable unless proven 

otherwise. A poultry industry trade 

association provided examples of 

complex fact patterns and asked, given 

each situation, how the regulated entity 

could demonstrate actions were taken 

for appropriate reasons. 

An industry association contended 

proposed § 201.304(a) would eliminate 

the statutory requirement in 7 U.S.C. 

192 that adverse actions against a 

market vulnerable individual are only 

prohibited if they are undue or 

unreasonable. The commenter noted the 

statute only prohibits ‘‘undue or 

unreasonable’’ advantages and 

disadvantages, meaning advantages or 

disadvantages that lack a reasonable 

business purpose. However, the 

commenter pointed out that, under the 

proposed rule, if the action is ‘‘adverse’’ 

and it impacts a market vulnerable 

individual, even if it was based on a 

legitimate business reason, the regulated 

entity would be in violation of the 

regulations. The commenter also noted 

that enforcing contract rights is often 

‘‘adverse against’’ the other party, but 

‘‘adverse’’ does not mean inappropriate 

or unfair. Commenters cautioned the 

proposed rule may result in regulated 

entities giving all producers the same 

contract terms to avoid litigation, which 

would eliminate the market competition 

the Act was intended to protect. 

AMS Response: AMS agrees with 

commenters that legitimate business 

justifications exist for disparate 

treatment of producers. AMS does not 

agree, however, that there are many 

legitimate business justifications for 

prejudice or disadvantage on the basis 

of race, color, religion, national origin, 

sex (including sexual orientation and 

gender identity), disability, or marital 

status, or age of the covered producer. 

The rule seeks to prevent regulated 

entities from discriminating against 

producers on specific prohibited bases, 

retaliating against producers for 

exercising certain protected rights, and 

deceiving producers in the procurement 

of livestock. It does not limit the ability 

of regulated entities to make other 

business decisions, as long as they 

comply with the Act in that they are not 

unduly prejudicial or unjustly 

discriminatory. This includes 

terminating contracts for violating 

contractual provisions such as animal 

welfare policies. To clarify what types 

of conduct are allowed, the final rule 

delineates two specific legitimate 

justifications for discriminatory action 

by regulated entities against producers. 

Discriminatory conduct by a regulated 

entity falling in one of these categories 

is not prejudicial: (1) the regulated 

entity is fulfilling a religious 

commitment related to livestock, meats, 

meat food products, livestock products 

in unmanufactured form, or live 

poultry, and (2) a Federally-recognized 

Tribe, including its wholly or majorityowned entities, corporations, or Tribal 

organizations, that is performing Tribal 

governmental functions. 

AMS is adopting the religious 

exception to recognize the important 

role ritual slaughter plays in certain 

religious traditions. AMS is also 

recognizing the important roles that 

Tribes play as governmental units and 

operators of economic enterprises. In 

those governmental activities, as 

interpreted by the Supreme Court as 

well as Federal laws governing Tribal 

affairs, Tribes may require the flexibility 

to only purchase livestock from or sell 

meat to their members. AMS believes 

that actions following these two 


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principles do not amount to undue or 

unreasonable prejudice, disadvantage, 

inhibition of market access, or adverse 

action. Through its review of public 

comments and based on its experience, 

AMS finds these are the only two 

appropriate exemptions from the rule’s 

broad prohibition against undue and 

unreasonable prejudices and 

disadvantages. 

AMS underscores that, in this rule, 

legitimate justification only applies to 

whether adverse actions against covered 

producers on a prohibited basis are still 

permissible. Where the adverse action is 

not on a prohibited basis or was not 

differential in its treatment of producers 

on the prohibited basis, then the 

question of there being a legitimate 

justification is not relevant. 

AMS disagrees with the comment that 

§ 201.304(a) would eliminate the 

statutory requirement that a prohibited 

prejudice, disadvantage, or 

discrimination is undue, unreasonable, 

or unjust. To the contrary, AMS finds 

that prejudice, disadvantage, or 

discrimination on the prohibited bases 

set forth in this final rule to be per se 

unjust, undue, and unreasonable. As 

commenters to this rule have 

acknowledged prejudicial treatment on 

the prohibited bases has no place in the 

market. 

E. Retaliation (§ 201.304(b)) 

AMS proposed addressing retaliation 

by outlining protected activities that a 

covered producer may engage in but 

that a regulated entity may not use as 

grounds for unjust discrimination or 

undue prejudice or disadvantage. The 

proposed regulations would have 

prohibited regulated entities from 

retaliating against covered producers for 

participating in a protected activity by 

terminating contracts, adversely 

differential performance or enforcement 

of a contract, refusing to renew 

contracts, offering more unfavorable 

contract terms than those generally or 

ordinarily offered, refusing to deal, 

interfering with third-party contracts, or 

other actions with adverse impact to 

covered producers. These proposed 

regulations are adopted in this final 

rule. 

i. Usefulness of Regulatory Protections 

To Protect Producers From Retaliation 

AMS requested comment on whether 

the proposed prohibition on retaliation 

would assist producers in avoiding 

unjust market discrimination, accessing 

markets, obtaining meaningful price 

discovery, or preventing anticompetitive 

practices. 

Comment: Several organizations and 

an academic institution expressed 

support for the proposed rule’s 

retaliation provisions, saying that 

poultry and meat companies take 

advantage of unbalanced power to 

create a climate in which farmers and 

ranchers fear retaliation for exposing 

unfair industry practices. One 

organization cited a recent anonymous 

survey of contract growers it had 

conducted, in which multiple 

respondents described experiencing 

retaliation from integrators and said 

integrators regularly terminate the 

contracts of farmers who engage in 

whistleblowing activities, leaving them 

with substantial debt tied up in 

specialized, single-use structures built 

as a condition of their contractual 

agreements. 

An agricultural advocacy organization 

said § 201.304(b) as proposed fits easily 

within the scope of the Act’s 

prohibitions on undue prejudice and 

unjust discrimination, closes a key 

enforcement gap, and represents a solid 

first step toward prohibiting unfair 

retaliation. An agricultural and 

environmental organization expressed 

support for the proposed provision but 

urged AMS to strengthen the final 

version. The commenter said regulated 

entities have deeply embedded 

retaliation into their business practices, 

leaving producers too intimidated to 

expose industry abuses. The commenter 

also cautioned that meat processors and 

live poultry dealers may attempt to find 

novel ways to retaliate against 

producers that do not directly violate 

the proposed rule, suggesting AMS 

broaden the range of protected producer 

activities and of prohibited retaliatory 

behavior. 

A poultry grower expressed support 

for the protections, saying integrators 

had taken measures, such as delivering 

poor inputs and imposing extended 

timeouts on flock placements, against 

him and other growers who spoke up 

against abusive integrator practices. 

This commenter also said cattle and 

pork producers take similar actions 

against producers who expose 

problematic practices. A meat industry 

trade association said the proposed rule 

would ensure that farmers and ranchers 

have access to a public forum necessary 

for open, transparent communication. 

Numerous individuals indicated 

support for the proposed rule’s 

protections against retaliation, with 

many saying the proposed rule would 

allow farmers to engage in 

whistleblowing actions without facing 

repercussions and would thus promote 

consumer, environmental, and animal 

welfare concerns. 

AMS Response: AMS takes note of the 

commenters’ support for the usefulness 

of the provisions. AMS designed the 

provision on retaliation to cover the 

core activities of being a producer—that 

is, activities are essential or unavoidable 

for producers in terms of their abilities 

to enjoy the full extent of their bargain 

and protect their economic rights. AMS 

notes that the provision that protects a 

covered producer who communicates or 

cooperates ‘‘with a person for the 

purposes of improving production or 

marketing of livestock or poultry’’ is 

broad. This covers many different 

scenarios not specifically named in this 

rule. AMS expects the retaliation 

provision of this rule to provide a 

significant measure of protection to 

covered producers against prohibited 

conduct, and likewise provide 

opportunity for redress, both to stop 

particularized harmful conduct, and 

keep it from persisting and causing 

greater harm. AMS chose this list of 

prohibited retaliatory practices based on 

conduct the agency identified as most 

commonly relevant to regulated entities’ 

practices that exclude or penalize 

producers. This list is based on AMS’s 

experience fielding complaints from 

producers, from its expertise in the 

operation of the livestock and poultry 

markets and practices of market 

participants, as well as the numerous 

comments to this rule that identified 

similar practices. AMS acknowledges 

there may be other forms of retaliation 

that would violate the Act that are not 

specifically delineated under this 

rulemaking. Prosecutorial discretion 

will determine what conduct is in fact 

retaliatory based on the facts and 

circumstances of each case. AMS made 

no further changes in response to these 

comments. 

Comment: An agricultural advocacy 

organization suggested AMS consider 

further developing the enforcement 

procedures for the retaliation 

provisions, as well as the evidentiary 

burdens associated with complainants 

and defendants. The commenter 

specifically recommended that AMS 

establish a burden-shifting approach 

which would establish that, once a 

complainant has made a prima facie 

showing that a covered producer was 

subjected to retaliation after engaging in 

protected activities, the regulated entity 

would have to show by clear and 

convincing evidence that they would 

have taken the same action in the 

absence of the producer’s participation 

in protected activities. Shifting the 

burden to the regulated entity (who has 

the best access to proof about the 

underlying facts) once the complainant 

has met an initial threshold would 

reflect a public policy position against 


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190See 15 U.S.C. 7a–3(b)(2)(C). 

191See 5 U.S.C. 1221(e)(2). 

192See, e.g., Young v. United Parcel Service, Inc., 

575 U.S. 206, 206–07, 228–30 (2015) 

193USDA, Agricultural Marketing Service, 

‘‘Frequently Asked Questions on the Enforcement 

of Undue and Unreasonable Preferences under the 

Packers and Stockyards Act,’’ August 2021, https:// 

www.ams.usda.gov/rules-regulations/packers-andstockyards-act/faq. 

retaliation. The commenter said this 

approach would track with that used in 

other Federal whistleblower protection 

regimes, such as the Criminal Antitrust 

Anti-Retaliation Act 190 and the 

Whistleblower Protection Act applicable 

to the Federal civil service,191 and 

would draw on a key element of Title 

VII discrimination law that allows 

complainants to initiate proceedings 

without being forced to prove the 

respondents’ state of mind.192

AMS Response: As described in 

Section V—Changes from the Proposed 

Rule, subsection D—Retaliation 

Provisions, AMS changed ‘‘because of’’ 

to ‘‘based upon.’’ Paragraph (b)(1)’s 

prohibition as ‘‘based upon’’ is intended 

to be broader than ‘‘but for’’ causation 

and so capture when the protected 

characteristics or status are a material, 

or non-trivial, element of the decision to 

take an adverse action against a covered 

producer. AMS expects that fact-finding 

tribunals will establish the necessary 

processes for proving these elements. 

Moreover, AMS expects that evidentiary 

presentation may often follow those 

approaches to proving retaliation in 

other contexts as a function of the 

natural course of any litigation. AMS 

underscores that the rule is designed to 

protect producers’ ability to engage in 

such covered activities, with the clarity 

provided by the rule specifically 

designed to assist producers in 

identifying and acting in a manner to 

effectuate their rights. AMS further 

notes that the prohibition on adverse 

actions taken on pretext are prohibited 

under 9 CFR 201.306 as established by 

this rule. 

Comment: An organization said the 

proposed anti-retaliation provisions 

should cover violation disclosures made 

within the chain of command or as part 

of the producer’s job duties because 

farmers and ranchers often report issues 

internally as a first step in drawing 

attention to them before reporting them 

to regulators or going public with them. 

AMS Response: The rule as written 

protects covered producers from 

retaliation for protected activities, 

which include the assertion of 

contractual rights. Violation disclosures 

made within the chain of command or 

as part of the covered producer’s 

contractual duties fall within the 

operation of the contract between the 

covered producer and the regulated 

entity, and as such may be expected to 

be covered by the rule. Accordingly, 

AMS made no change to the rule. 

Comment: Several industry trade 

associations said the retaliation 

provisions are not necessary because the 

‘‘conduct’’ at issue is already prohibited 

by existing laws, such as 9 CFR 201.211 

identifying the criteria used to 

determine whether an action is an 

undue or unreasonable preference or 

advantage. 

AMS Response: AMS agrees with the 

commenters that the retaliatory conduct 

at issue is prohibited under the Act and 

could be enforceable under existing 

rules and regulations, including criteria 

set forth in 9 CFR 201.211.193 Compared 

to general criteria and interpretive 

guidance, this rule provides greater 

clarity, specificity, and certainty to how 

the Act applies, which will facilitate 

higher levels of compliance by regulated 

entities with the Act, broader 

enforcement of its provisions by AMS, 

and more informed producers, who will 

be in a better position to assert their 

rights established by the Act. 

Additionally, unlike § 201.211, this rule 

focuses on preventing undue prejudices 

and disadvantages and does not focus 

on preferential treatment that is not 

discriminatory. Accordingly, AMS made 

no change to the rule. 

ii. Appropriateness of Specific Acts of 

Retaliation Listed in Proposed 

§ 201.304(b)(3) 

AMS requested comment on whether 

the specific retaliation acts listed in the 

proposed rule are appropriate. AMS also 

sought comment on whether there are 

other forms of retaliatory conduct that 

should be specified. 

a. Termination or Non-Renewal of 

Contracts 

AMS requested comment on whether 

termination or non-renewal of contracts 

is appropriate as a specific retaliation 

act listed in the proposed rule. It noted 

that covered producers have expressed 

fear of this type of retaliation through 

communication with AMS personnel 

and in comments on previous related 

rulemakings. 

Comment: Numerous individuals said 

they are concerned about the prospect of 

farmers losing their contracts and their 

livelihoods if they raise issues with 

their treatment by poultry and meat 

companies. 

AMS Response: AMS takes note of the 

commenters’ support for the usefulness 

of the provisions. AMS made a range of 

adjustments in the final rule to enhance 

the final rule’s protections for covered 

producers. 

b. Interference in Farm Real Estate 

Transactions or Contracts With Third 

Parties 

AMS requested comment on whether 

interference in farm real estate 

transactions or contracts with third 

parties is appropriate as a specific 

retaliation act listed in the proposed 

rule. 

Comment: A swine industry trade 

association said the proposed rule 

describes the retaliatory conduct too 

vaguely, making it difficult for a 

regulated entity to determine whether 

its actions would be prohibited. 

AMS Response: AMS believes that 

some degree of generality is necessary to 

capture the range of conduct that could 

give rise to a violation of the rule. 

However, the rule is not designed to 

prohibit every instance where a 

regulated entity’s contracting decisions 

are unfavorable to a covered producer. 

For example, the rule would not apply 

where a regulated entity was engaged in 

unrelated business around the purchase 

or sale of farmland, or where a regulated 

entity chose for unrelated reasons not to 

continue a contract in the course of a 

covered producer’s attempts to sell its 

farm. AMS believes that the wording of 

proposed § 201.304(b)(3)(iv)— 

‘‘[i]nterference in farm sale transactions 

or contracts with third parties’’—is 

appropriately specific to prohibit 

regulated entities from retaliating 

against covered producers for engaging 

in protected activities. This is because 

the focus of an AMS inquiry would be 

to determine the reason for the 

interference. AMS would determine 

whether a regulated entity interfered in 

a farm sale or third party contracting; if 

such interference occurred, whether it 

was harmful to the covered producer; 

and whether the interference occurred 

because the covered producer engaged 

in protected activity. Additionally, in 

response to this comment, AMS has 

included explanatory language in the 

retaliation section (Section VI.C— 

Provisions of the Final Rule, Retaliation) 

discussing the adverse effects that 

interference with the transfer of farm 

real estate by a regulated entity has on 

producers. 

iii. Delineation of Additional Forms of 

Retaliatory Conduct 

AMS requested comment on whether 

the specific acts of retaliation in the 

proposed rule are appropriate, and 

whether there are other forms of 

retaliatory conduct that should be 

specified. 


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Comment: Several commenters, 

including a farmers’ union, a group of 

State attorneys general, and several 

other organizations urged AMS to 

explicitly state that the list of specific 

prohibited acts of retaliation is not 

meant to be exhaustive, with several 

commenters suggesting AMS add the 

phrase ‘‘including, but not limited to’’ to 

the introductory clause of 

§ 201.304(b)(3). Commenters said 

establishing that prohibited activities 

are not limited to those listed would 

allow for future flexibility in addressing 

specific acts of retaliation that may 

arise. 

AMS Response: As explained in 

Section V—Changes from the Proposed 

Rule, subsection D—Retaliation 

Provisions, in response to these 

comments, AMS has added a new 

paragraph (b)(3)(vi) to prohibit ‘‘any 

other action that a reasonable covered 

producer would find materially 

adverse.’’ 

Comment: A non-profit or other 

organization said the final rule should 

prohibit regulated entities from 

retaliating against any covered 

producers for any form of association, 

broadly defined, because allowing 

farmers to freely associate and to use a 

range of different communications 

platforms is necessary for the sector to 

flourish. An organization said the final 

rule should prohibit the offering of 

contract terms that are less favorable 

than those generally or ordinarily 

offered. 

AMS Response: Proposed 

§ 201.204(b)(2)(iii) provided broad 

protection against retaliation for a 

producer to form or join a producer or 

grower association and would cover all 

aspects of associations and cooperatives 

relevant to the business of livestock and 

poultry. Further, AMS acknowledges 

the importance of the freedom of 

association generally but underscores 

that the protections of the Act have 

limits. The Act is designed to protect 

covered producers in the business of 

livestock and poultry. AMS is not in a 

position to know or evaluate the full 

range of associations that individuals 

who are producers may join, and it 

would not be appropriate for AMS to be 

involved in encouraging or discouraging 

such associational activities, including 

whether regulated entities should be 

required to do business with covered 

producers that engage in those 

activities. Some associational activities 

unrelated to the business of livestock 

and poultry may expose regulated 

entities to reputational or other risks in 

the marketplace. 

Comment: An academic institution 

recommended that AMS include 

language making it clear that the 

prohibited retaliatory activities would 

encompass coercion or intimidation, 

such as threats to take one of the 

prohibited actions. 

AMS Response: This rule is intended 

to establish broad prohibitions against 

retaliatory activities that in AMS’s 

experience have significantly inhibited 

producers’ ability to freely compete and 

secure the full value of their products 

and services. AMS agrees that 

intimidation or coercion that would 

dissuade or coerce covered producers 

from engaging in the prohibited 

activities are covered under ‘‘retaliate or 

otherwise take an adverse action against 

a covered producer.’’ In particular, 

intimidating or coercive conduct that 

credibly threatens retaliation prohibited 

by this rule would rise to the level of 

actionable adverse conduct under by 

this rule—which the Agency 

underscores further through its addition 

of Paragraph (b)(3)(iii) and (v) under the 

list of adverse actions. For example, if 

a regulated entity were to communicate 

to a producer stating, ‘‘if we were you, 

we would not report to the government’’ 

with the implication that the regulated 

entity might not renew their contract on 

favorable terms, AMS views this as a 

form of prohibited retaliatory conduct in 

its incipiency that this rule is intended 

to stop. 

iv. Protection of Producers Who Choose 

Not To Participate in Protected 

Activities 

AMS requested comment on whether 

prohibitions on retaliation should 

protect producers who choose not to 

participate in protected activities. AMS 

provided the example of whether the 

provision should prohibit giving 

premiums or discounts for joining or not 

joining livestock or poultry associations. 

Comment: A cattle industry trade 

association said these prohibitions 

should expressly protect producers from 

coercive conduct that directs them to 

either join or not join a particular 

producer association. An agricultural 

advocacy organization said the 

retaliation provisions should cover 

circumstances in which regulated 

entities reward producers who do not 

join a producer association. An 

agricultural advocacy organization 

noted that the freedom to refrain from 

associating is as important as the 

freedom to associate and represents the 

other side of the same coin. 

AMS Response: AMS agrees that 

protected activities include the decision 

not to participate in such an activity. 

Based on its experience regulating the 

livestock sector, covered producers may 

be coerced by regulated entities to 

participate in associational activities or 

contact the government on regulatory 

and policy matters even when they may 

not agree. As recently as AMS’s 

proposal on ‘‘Transparency in Poultry 

Growing Contracts and Tournaments,’’ 

covered producers reported to AMS 

potentially coercive pressure by 

regulated entities on poultry growers to 

oppose the regulation. AMS also notes 

commenter statements that regulated 

entities have pressured and may 

continue to pressure covered producers 

to join associations to support industry 

stances with which they disagree. 

Accordingly, AMS has added 

§ 201.304(b)(2)(ii) and revised 

§ 201.304(b)(2)(iii) to clarify that the 

decision not to participate in the 

protected activities, respectively, of 

engaging in a voluntary communication 

with the government or of forming or 

joining an association are also covered 

by the rule’s protections against 

retaliation. 

v. Appropriateness of Bases of Protected 

Activities 

AMS requested comment on whether 

the bases of protected activities were 

appropriate, including the criteria for 

selection and application of those 

criteria. It further sought comment on 

whether the bases of protected activities 

are too broad, are too narrow, or should 

be changed in any other way. Comments 

received in response to this general 

inquiry are outlined below. 

a. Communication With a Government 

Agency With Respect to Matters Related 

to Livestock, Meats, or Live Poultry or 

Petitions for Redress of Grievances 

Comment: AMS requested comment 

on whether communication with a 

government agency on matters related to 

livestock, meats, or live poultry or 

petitions for redress of grievances is 

appropriate to include as a protected 

activity under § 201.304(b)(2). 

Several agricultural advocacy 

organizations said AMS should make 

clear that the proposed rule would 

protect producer communication with 

any sector or level of government by 

including all three branches of 

government in this provision, with one 

commenter also recommending AMS 

specify this provision applies to both 

State and Federal government. 

Several commenters recommended 

revised text as follows: 

‘‘(i) A covered producer communicates 

with a government agency, court, or 

legislature with respect to any matter related 

to livestock, meats, meat food products, 

livestock products in unmanufactured form, 

or live poultry or petitions for redress of 


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grievances before a court, legislature, or 

government agency.’’ 

AMS Response: AMS agrees with the 

commenter and intends that the rule 

should include protections for 

communications with any of those 

entities, including any committee or 

member official of those entities. In this 

final rule, AMS is aligning the use of the 

terms ‘‘government agency, court, or 

legislature’’ and simplifying the 

language to ‘‘government entity or 

official.’’ This change ensures that 

protected communications may occur 

with any of the three branches of 

governments and with individual 

government officials, including 

committees and members of a 

legislature. As proposed, the rule did 

not limit its protection to 

communication with the Federal 

government. By using the words 

‘‘government entity or official,’’ the 

rule’s plain language applies equally to 

communications with all levels of 

government—Federal, State, Tribal, and 

local—with respect to the matters 

indicated. 

b. Assertion of Rights Granted Under the 

Act, 9 CFR Part 201, or Contract Rights 

AMS requested comment on whether 

assertion of rights granted under the 

Act, 9 CFR part 201, or contract rights 

is appropriate to include as a protected 

activity under § 201.304(b)(2). 

Comment: A group of State attorneys 

general said the proposed rule may 

inadvertently leave out protections for 

farmers who communicate their 

concerns directly to regulated entities, 

suggesting AMS target this gap by 

expanding § 201.304(b)(2)(vii) 

(§ 201.304(b)(2)(ii) in the proposed rule) 

to include notification by a producer to 

the regulated entity of a potential breach 

of contract. An academic institution 

said protected activities should include 

the assertion of any civil right held by 

the producer, to the full extent feasible 

within the scope of AMS’s authority. 

The attorneys general said that, while 

the proposed rule covers rights granted 

under the Act, the proposed rule, and 

contract rights, it does not encompass 

other rights a producer may have, such 

as whistleblower or other rights 

conferred by Federal or State law. An 

organization said the proposed rule 

should clarify, given the imbalance of 

power in contracting, that producers 

cannot waive the rights covered by this 

provision by any agreement, policy 

form, or condition of employment, 

including by a pre-dispute arbitration 

agreement. 

AMS Response: With respect to the 

suggestion that AMS revise 

§ 201.304(b)(2)(vii) to include 

notification by a producer to the 

regulated entity of a potential breach of 

contract, the regulation as proposed 

protects producers’ right to assert their 

contract rights, their rights under 9 CFR 

201, and their rights under the Act. The 

language of this protection necessarily 

encompasses the act of communicating 

with regulated entities, including to 

prevent a potential breach of contract; 

otherwise, a producer would be unable 

to exercise their contract rights. 

Accordingly, there is no need to add 

further notifications by the producer to 

the regulated entities to the list of 

protected activities in § 201.304(b)(2). 

With respect to the assertion of any 

civil right, the protected activities 

enumerated in § 201.304(b)(2) were 

chosen because of their nexus to the 

business relationship between regulated 

entities and covered producers with 

respect to livestock, meats, meat food 

products, livestock products in 

unmanufactured form, or live poultry. 

To the extent that a contract between a 

regulated entity and a covered producer 

includes representations and warranties, 

including implied ones, relating to 

either party’s compliance with other 

Federal or State laws, such as labor, 

health, and safety practices, this 

provision would extend to 

communications relating thereto. AMS 

notes that the protection afforded in 

§ 201.304(b)(2)(vi) covers supporting or 

participating as a witness in any 

proceeding with the regulated entity. 

The rule does not change any additional 

protections that may be provided under 

other Federal or State anti-retaliation 

laws. 

With respect to the request that AMS 

revise the rule to clarify that producers 

cannot waive rights covered by the rule, 

AMS believes that the commentors are 

mistaken about the structure of the Act 

and its regulations. AMS enforces this 

rule. Irrespective of any agreement 

between the contracting parties, AMS 

does not waive its responsibilities to 

enforce the Act. The Act and regulatory 

scheme are designed to vindicate the 

public interest in fair and honest 

markets. Thus, AMS regularly brings its 

own enforcement actions to sanction 

companies that violate the provisions of 

the Act, irrespective of the contracting 

parties’ waivers of liability. A regulated 

entity that seeks a waiver from a 

producer through undue prejudice, 

retaliation or deception still violates the 

general provisions of the Act by using 

a deceptive, unfair, or unjustly 

discriminatory practice. 

To the extent that individuals waive 

their rights, AMS points the commenter 

to existing regulations at 9 CFR 201.218, 

which limit the use of mandatory 

arbitration clauses, as mandated by 

Congress in the 2008 Farm Bill (Pub. L. 

110–246). Specifically, those regulations 

require that the regulated entity offer the 

producer or grower a specific disclosure 

regarding the ability to decline a 

mandatory arbitration clause and 

indicate that failure to accept or decline 

the arbitration clause will be treated as 

if the clause is declined. Additionally, 

the regulation sets out criteria governing 

the reasonableness of the arbitration 

clause. Arbitration is a procedural 

forum that some parties may utilize to 

adjudicate substantive rights; arbitration 

clauses cannot waive substantive rights 

under contracts or the Act. 

Accordingly, AMS is making no 

changes to the rule in response to these 

comments. 

Comment: A swine industry trade 

association said the broad language of 

this provision could be read to mean 

that the proposed rule extends to the 

point that carrying out the terms of a 

contract is considered a protected 

activity. 

AMS Response: AMS agrees with the 

comment. The assertion of rights under 

a contract includes the covered 

producer’s ability to assert contract 

performance. Accordingly, AMS is 

making no changes to the rule in 

response to this comment. However, as 

the commenter notes, asserting rights 

under a contract is not a protected 

activity under the Act and it is not the 

intention of AMS to incorrectly assert 

this false presumption through this 

rulemaking. 

c. Assertion of Right To Form or Join a 

Producer Association or Collectively 

Process, Prepare for Market, Handle, or 

Market Livestock or Poultry 

AMS requested comment on whether 

assertion of the right to form or join a 

producer association or collectively 

process, prepare for market, handle, or 

market livestock or poultry is 

appropriate to include as a protected 

activity under § 201.304(b)(2). 

Comment: An academic institution 

said the proposed rule should extend its 

protection of communications 

associated with asserting the rights 

named in proposed § 201.304(b)(2)(iii) 

to also cover producers engaging in talks 

about these activities. The commenter 

said this change would ensure that 

retaliation protections clearly include 

the initial communications and 

negotiation process for producers taking 

steps to form or join a producer 

association or collectively process, 

prepare for market, handle, or market 

livestock or poultry. 

A whistleblower advocacy 

organization said it supported the 


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proposed rule’s protection of the right to 

associate because retaliation would 

limit producers’ ability to exchange 

information and engage in procompetitive collaboration. 

Multiple individuals said 

participation in producer organizations 

and associations helps provide farmers 

with more access to information 

relevant to their businesses and 

promotes competition by enabling the 

production of better-quality products. A 

former trade association CEO said the 

social and informational benefits of 

association membership are especially 

important in the farming industry 

because of its potential for isolation. 

This commenter further suggested large 

agricultural companies would do well to 

appreciate the benefits of producer 

participation in such organizations, 

such as opportunities to make progress 

on solving problems, develop industry 

consensuses for presenting to 

government, and hear the perspectives 

of members with opposing views. An 

individual said producer organizations 

often act as a barrier between individual 

producers and consumers, and the 

proposed rule would prevent producer 

organizations from retaliating against 

producers who try to change this 

behavior and provide truthful 

information about the conditions under 

which their products are grown or 

raised. The commenter said this would 

protect farmers’ right to organize to 

improve their pay and working 

conditions. 

AMS Response: AMS believes that the 

act of forming or joining an association 

clearly encompasses the act of 

communicating about the formation or 

joining, including examining the 

decision whether to form or join an 

association. All such activities are 

covered by the final rule. Therefore, 

AMS does not make any changes to the 

rule on those grounds. 

Additionally, AMS appreciates that 

producer organizations may at times be 

at odds with their producer members. 

However, producer organizations are 

not considered regulated entities under 

this rulemaking, and thus retaliatory 

conduct at the hands of such 

organizations is not covered. Producers 

have the choice to join or separate from 

such organizations based on their 

individual feelings surrounding the 

costs and benefits such membership 

brings. If producers feel as though their 

membership of an organization is 

serving as a barrier between them and 

consumers, thus preventing 

transparency regarding growing 

conditions, producers may find it 

advantageous to disassociate. Often 

producers do not have this luxury in 

their relationship with packers and 

integrators due to their reliance on these 

regulated entities and the absence of 

alternative buyers due to regional 

concentration. 

Comment: A swine industry trade 

association said § 201.304(b)(2)(iii) is 

overly broad, arguing that any covered 

producer that joins an industry 

association or seeks to do so would then 

have the means—based on that 

membership—to make a claim against a 

regulated entity for engaging in 

perceived retaliatory behavior. 

AMS Response: AMS disagrees with 

the commenter’s assertion. The 

regulation protects the covered producer 

from retaliation for forming or joining 

an association or choosing not to join an 

association. It does not protect the 

covered producer from other acts that 

the association may take. This rule does 

not condone, for example, associational 

behaviors that violate the Sherman Act. 

Nor does this rule otherwise restrict the 

relationship between regulated entities 

and covered producers, whether the 

association may support or condemn 

particular acts or practices. Nor, 

additionally, does it suggest that the 

mere fact of forming or joining an 

association garner absolute protection 

from adverse actions by the regulated 

entity which are unrelated to forming or 

joining an association. Therefore, AMS 

has made no changes to the regulation 

as proposed. 

d. Communication or Cooperation for 

Purposes of Improving Production or 

Marketing of Livestock or Poultry 

AMS requested comment on whether 

communication or cooperation for 

purposes of improving production or 

marketing of livestock or poultry is 

appropriate to include as a protected 

activity under § 201.304(b)(2). 

Comment: A swine industry trade 

association said this provision is too 

broad because it could be read to mean 

that many communications related to a 

producer’s business are protected. 

AMS Response: AMS fully intends to 

protect many of the communications a 

producer makes in the ordinary course 

of business, so that the producer may 

freely operate in the market without fear 

of retaliation. Therefore, the regulation 

protects lawful communications and 

cannot, and does not seek to, absolve 

covered producers from unlawful 

communications. Section 201.304(b)(2) 

makes this clear by underscoring that 

the producers’ activities are protected 

from retaliation only to the extent they 

are not otherwise in violation of Federal 

antitrust and other relevant laws. 

Furthermore, to find a violation of 

§ 201.304(b)(2) there must be a causal 

connection between the regulated 

entity’s behavior and a producer’s 

protected communications, including 

where a regulated entity makes a threat 

that would reasonably dissuade the 

covered producer from engaging in the 

protected activity. AMS made no 

changes in response to this comment. 

e. Supporting or Participating as a 

Witness in any Proceeding Under the 

Act or a Proceeding Relating to an 

Alleged Violation of Law by a Regulated 

Entity 

AMS requested comment on whether 

supporting or participating as a witness 

in any proceeding under the Act or a 

proceeding relating to an alleged 

violation of law by a regulated entity is 

appropriate to include as a protected 

activity under § 201.304(b)(2). 

Comment: An organization and 

several individuals indicated support 

for this protection, saying the ability to 

testify without fear of retaliation is 

crucial for promotion of fair and 

competitive livestock and poultry 

markets. Some of these commenters 

mentioned the example of cattle 

ranchers who declined to testify before 

Congress after facing threats and 

retaliation. The organization urged AMS 

to extend this protection to 

participation, assistance with, or intent 

to participate in any investigation of a 

possible violation of the Act. 

AMS Response: The regulation 

already extends this far. The proposed 

regulation protected any 

communication with a governmental 

entity, including a governmental 

agency, legislature, or court, with 

respect to livestock, meats, meat food 

products, livestock products in 

unmanufactured form, or live poultry. 

This protection encompasses 

participation, assistance, or intent to 

participate in any investigation of a 

possible violation of the Act. AMS 

provided an additional protection with 

respect to serving as a witness because 

of the different and more public nature 

of such communication. Furthermore, to 

underscore the importance of respecting 

the independent functioning of the 

judicial process, the provision covers 

the covered producer’s ability to serve 

as a witness in any proceeding against 

a regulated entity. AMS made no 

changes in response to this comment. 

f. Other Comments on Appropriateness 

of Bases of Protected Activities 

Comment: A number of commenters 

urged AMS to expand the list of 

protected activities. An agricultural and 

environmental organization said AMS 

should disavow the proposed rule’s 

position that adverse activities not tied 


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to the proposed list of protected 

activities would not receive protection 

under the rule, arguing that retaliation 

of any kind against producers exercising 

their lawful rights qualifies as unjust 

discrimination and an unreasonable 

prejudice under the plain meaning of 

the Act. The commenter urged AMS to 

instead include the following catch-all 

provision to protect covered producers 

from retaliation against other lawful 

conduct in service of livestock 

production and marketing: 

‘‘(viii) A covered producer engages in 

any lawful conduct for the purpose of 

improving production or marketing of 

livestock or poultry.’’ 

A farmers union said AMS should 

broaden the grievance-sharing activities 

producers can participate in to give 

producers more protection from 

retaliation. 

An agricultural advocacy organization 

said AMS should protect the ability of 

producers to freely associate with other 

farmers and other organizations, 

including using social media or other 

communication platforms. 

An agricultural and environmental 

organization said AMS should expand 

the list of protected activities to include 

situations in which producers maintain 

their status as independent participants 

on open markets, refusing to enter into 

forward contracts or other contractual 

agreements that set future price or 

performance at the regulated entity’s 

request. According to the commenter, 

producers who resist entering into 

forward contracts and AMAs often face 

retaliation, and therefore the final rule 

should protect them. The commenter 

recommended AMS add another 

paragraph to § 201.304(b)(2) as follows: 

(vii) A covered producer refuses to 

sell livestock or poultry through forward 

contracts, AMAs, or similar contractual 

arrangements, opting instead to engage 

in open market sales. 

An organization said lawful 

communications protected under the 

proposed rule should also include 

situations where a complainant 

provides information regarding conduct 

that they reasonably believe violates the 

Act or is about to do so. The commenter 

said that, because most people are not 

experts on their rights under the Act, 

the proposed rule should establish that 

complainants do not need to mention 

specific violations and that, as with 

similar corporate anti-retaliation 

measures, they do not need more than 

a subjective, good faith belief that the 

conduct at issue violates the Act. The 

commenter also said AMS should allow 

these complaints in any language and by 

means including in person, in writing, 

and by email. 

An academic institution said the 

protected activities listed in the 

proposed rule are all important in 

empowering producers to assert their 

rights and promote fair markets. 

AMS Response: AMS appreciates and 

shares the commenters’ viewpoint that 

retaliation is a serious concern in the 

livestock and poultry industry. AMS has 

attempted to craft this regulation to 

respond to the most common and 

clearly defined forms of retaliation in 

the form of prohibited unjust 

discrimination on the basis of protected 

activities. The regulation does not seek 

to define every prohibited activity, as 

the Act may limit unjust discrimination 

in circumstances not foreseen by this 

final rule. If covered producers believe 

they have suffered a form of unjust 

discrimination that is prohibited by the 

Act, they should report that to AMS. 

AMS notes that communication with 

other producers for the purposes of 

improving the production or growing of 

livestock or poultry is already protected 

by the proposed regulation. Such 

communication may include sharing 

grievances over practices by regulated 

entities or others as such 

communications relates to covered 

producers’ desire to overcome obstacles 

to improving or marketing their 

livestock or poultry. 

AMS acknowledges a commenter’s 

concern regarding some covered 

producers’ interest in not utilizing 

forward contracting for the sale of 

livestock. However, regulating whether 

covered producers have a right to any 

particular form of livestock sales 

transaction is outside the scope of this 

rule. 

AMS underscores that, to obtain the 

protection of this regulation, the 

producer need not engage in any 

particular form of the activity, such as 

quoting a precise regulatory section to 

assert an Act right. The focus will be on 

the substance of the producer’s 

activities, and a good faith effort to 

assert an Act or contractual right is still 

protected from retaliation on the basis 

of that assertion regardless of the 

precision, imprecision, or even good 

faith inaccuracy of the legal or 

contractual right being asserted by the 

producer. 

Accordingly, AMS did not make any 

changes in response to the comments. 

vi. Limiting of Protected Activities 

Relating to Communication and 

Cooperation, Beyond Government 

Entities, to USDA Extension and USDA 

Supported Non-Profit Entities 

AMS asked for input regarding 

whether protected activities related to 

communication and cooperation should 

be limited to USDA extension and 

USDA-supported non-profit entities, 

beyond government entities. 

Comment: Several commenters 

supported expanded protections for 

activities related to communication and 

cooperation. An agricultural advocacy 

organization said AMS should not limit 

these protections to USDA extension 

and USDA supported non-profit entities 

because producers may have concerns 

about their industry that extend past the 

department’s jurisdiction, giving 

examples such as concerns about 

managing animal waste that fall under 

State and Federal environmental 

regulations or issues relating to 

veterinary drugs or animal feed that are 

regulated by the Food and Drug 

Administration. 

An academic or research institution 

and several organizations said, given the 

information asymmetry and lack of 

transparency in livestock and poultry 

production markets, AMS should 

extend protection to more types of 

communications that producers may 

want or need to pursue in preventing 

market exclusion and asserting their 

rights and protections. Commenters 

suggested AMS should protect producer 

social media posts about unfair 

integrator treatment, as well as producer 

communications with relevant third 

parties, such as lawyers and legal aid 

organizations, veterinarians and others 

doing work related to animal welfare, 

producer advocacy organizations, and 

the media. 

Several commenters said AMS should 

introduce this provision in a new 

§ 201.304(b)(2)(ii), with other 

commenters providing the following 

variations on recommended regulatory 

text: 

(ii) A covered producer takes an action 

through a non-governmental third party that 

causes the producer’s grievances against a 

regulated entity or a group of regulated 

entities to be known. 

and 

(ii) A covered producer communicates 

with a reporter, private investigator, public 

interest organization, or the general public 

through traditional media or social media 

with respect to any matters related to 

livestock, meats, meat food products, 

livestock products in unmanufactured form, 

or live poultry; so long as such 

communication does not expose a trade 

secret a regulated entity has reasonably and 

clearly identified in writing as a sensitive 

and confidential trade secret. A regulated 

entity’s claim that any communicated 

information is a sensitive and confidential 

trade secret is not reasonable if the 

information is publicly available, shared by 

the regulated entity to any third party that is 

authorized to disseminate the information, or 

exposes standard industry practices common 


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among more than one regulated entity in the 

relevant market. 

AMS Response: AMS takes note of the 

commenters’ recommendations of 

expanded protections for activities 

related to communication and 

cooperation. AMS believes that the 

commentators’ concerns are largely 

addressed in the rule, which protects 

lawful communications with 

government agencies or other persons 

for the purpose of improving the 

production or marketing of livestock or 

poultry, exploring a possible business 

relationship, or supporting proceedings 

under the Act against a regulated entity, 

among other protected activities. The 

regulatory text provides broad coverage 

for these activities in § 201.304(b)(2)(iv) 

through (vi), without limitation. These 

communications are protected because 

they enhance producers’ ability to 

receive protection under existing laws, 

improve the production process, and 

facilitate enforcement of contracts in 

ensuring producers receive their bargain 

for exchange. Communications 

unrelated to those purposes are outside 

the scope of this regulation. 

Whether social media 

communications are covered will 

depend on the protected activity in 

question and the particulars of the 

social media forum in question. 

Whether a public post by a covered 

producer about treatment by a regulated 

entity that the covered producer asserts 

to be in violation of the Act or is 

otherwise harmful to the producer may 

depend on the facts and circumstances 

of the post. For example, to the extent 

that the producer is testifying to 

Congress or courts regarding unfair 

treatment and the social media post 

simply refers to the testimony or 

describes the same material, then, for 

example, such a post would likely be 

protected, depending on the full scope 

of the facts and circumstances. 

Similarly, if the social media post is 

part of an effort to share information 

with other producers for the 

improvement of production or 

marketing or is part of an effort to form 

an association or engage in cooperative 

activities, that would likely be protected 

under this rule as well since the rule is 

agnostic as to the form of the 

communications between producers. 

However, AMS notes that the activities 

protected under this rule are covered to 

the extent that these activities are not 

otherwise prohibited by Federal, State, 

or Tribal law. For example, the rule 

does not provide an exemption from 

defamation laws. 

Nor does this rule attempt to preempt 

freedoms of the press. Whether a 

communication with a reporter or 

public investigation organization is 

covered will depend upon the facts and 

circumstances. The inquiry would need 

to balance the important role that 

freedom of the press plays in 

maintaining market integrity with 

legitimate expectations by a regulated 

entity of good faith behavior by a 

producer under a contract. Relevant 

questions include whether the 

communication was part of a factual 

effort to assist the reporter in 

understanding and reporting on asserted 

violations of law and regulation and 

whether the producer provided any 

confidential business information to the 

investigator or otherwise exposed the 

regulated entity to commercial risk or 

reputational damage unrelated to the 

violation in question. Also potentially 

relevant, in some circumstances, may be 

whether the producer has exhausted 

other avenues for resolving any dispute 

and also the extent to which the 

regulated entity has a reputation 

recognized in the market for retaliation 

which would otherwise place the 

producer in fear of asserting rights even 

with the presence of this rule. 

The rule does not provide unlimited 

license for producers to damage the 

reputation of regulated entities. A social 

media post principally functioning as a 

threatening or coercive public 

communication is unlikely to be 

covered, absent other extenuating facts 

and circumstances. AMS underscores 

that the rule is intended to facilitate 

lawful communication and the exercise 

of lawful economic rights by covered 

producers, and the promotion of 

competitive markets and markets with 

integrity. That goal is most effectively 

served by enabling producers to exercise 

contractual and legal freedoms, 

communicate with government, other 

producers, and competitor firms for the 

purposes set forth in this rule. 

Therefore, AMS makes no changes to 

the rule in response to these comments. 

vii. Sufficiency of Proposed AntiRetaliation Provision’s Protection 

Regardless of Covered Producer’s Type 

of Business Organization 

AMS requested comment on whether 

the proposed anti-retaliation provision 

provides sufficient protection for all 

types of covered producer business 

organizations. 

Comment: An agricultural advocacy 

organization indicated that this 

provision provides sufficient protection 

regardless of the covered producer’s 

type of business organization. 

AMS Response: AMS made no 

changes in response to this comment. 

viii. Extension of Protections for 

Exploring a Business Relationship to 

Such Activities With any Person, Rather 

Than Solely Regulated Entities 

AMS requested comments on whether 

protections for exploring a business 

relationship with a regulated entity are 

sufficient, or whether such protections 

should extend to exploring business 

relationships with any person, in 

addition to regulated entities. 

Comment: Several organizations 

asked AMS to broaden these protections 

to include communications and 

negotiations with any entity for the 

purpose of exploring a business 

relationship or alternative business 

model. According to these commenters, 

producers may want to explore 

alternative uses for industry livestock or 

poultry-raising infrastructure or add an 

additional type of agriculture to their 

operation. Several commenters said that 

while they recognize that producers 

who transition outside of the industry 

would no longer be covered under the 

Act or subject to many of the retaliatory 

actions covered by the proposed rule, 

they believe extending this protection is 

necessary so producers can fully explore 

all potential business opportunities 

without worrying about punishment if 

they do decide to retain their current 

business relationship. 

Several commenters recommended 

the following revisions to 

§ 201.304(b)(2)(v): 

(v) A covered producer communicates or 

negotiates with a regulated entity, other 

commercial entity, or relevant consultant for 

the purpose of exploring a business 

relationship or alternative use or application 

of their property. 

AMS Response: The purpose of the 

provision is to preserve and promote the 

competitive position of the covered 

producer, and as such to ensure that the 

covered producer is not discouraged 

from seeking competitive alternatives by 

a regulated entity’s retaliation. 

Paragraph (b)(2)(v) protects a covered 

producer’s ability to communicate, 

negotiate, or contract with a regulated 

entity, another covered producer, 

another commercial entity, or 

consultant, for the purposes of exploring 

or entering into a business relationship. 

The Act is intended to ensure maximal 

competitive flexibility for covered 

producers. It may be the case that 

producers wish to explore a business 

opportunity by communicating, 

negotiating, or contracting with a 

consultant about forming a cooperative 

or, with a commercial intermediary 

such as an exchange or auction, or with 

another covered producer or 

commercial entity that may not yet be 


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a regulated entity but intends to engage 

in meat or poultry processing. It may 

also be the case that producers wish to 

negotiate with other covered producers 

for the purpose of jointly investing in a 

business venture such as a slaughter 

facility. Accordingly, AMS has amended 

the regulation to indicate that the final 

rule provides protection for a covered 

producer who communicates, 

negotiates, or contracts with a regulated 

entity, another commercial entity, 

another covered producer, or a relevant 

consultant, for the purpose of exploring 

a business relationship. AMS concludes 

that a consultant either works to benefit 

another commercial entity or works to 

benefit the covered producer, and so 

would be covered by the provision. 

ix. Include Catch-All Clause in 

Proposed List of Regulatory Actions To 

Cover Offering of Less Favorable 

Contract Terms 

AMS requested comment on whether 

the proposed list of retaliatory actions 

should include a catch-all clause, such 

as ‘‘offering contract terms that are less 

favorable than those generally or 

ordinarily offered.’’ 

Comment: Several organizations 

indicated support for a catch-all 

provision. The commenters said they 

would be in favor of prohibiting the 

retaliatory offering of less favorable 

contract terms as AMS suggested in the 

preamble to the proposed rule. 

Commenters said this addition would 

recognize the importance of contracts as 

a retaliatory weapon because of their 

effect on producers’ financial well-being 

and would avoid a potential loophole 

for the proposed rule’s prohibition on 

retaliatory termination or non-renewal 

of contracts and refusals to deal. One 

commenter suggested that AMS include 

a new provision saying ‘‘offering 

unfavorable contract terms that 

otherwise affect reprisal’’ or ‘‘offering 

contract terms that are less favorable 

than those generally or ordinarily 

offered’’ is a prohibited action. 

However, several commenters 

recommended that AMS also introduce 

a second, broader catch-all provision to 

ensure that regulated entities cannot 

simply formulate new ways to retaliate 

against producers for engaging in 

protected activities. These commenters 

suggested that AMS add the following 

regulatory text to § 201.304(b)(3) to 

achieve both aims: 

(v) Offering unfavorable contract terms in 

contract formation, contract modification, or 

contract renewal that affect reprisal. 

(vi) Any other action that adversely 

impacts a covered producer’s financial or 

reputational interests or may result in 

diminished contract performance with the 

regulated entity. 

Unfavorable contract terms include, 

but are not limited to: price terms, 

including any base or formula price; 

formulas used for premiums or 

discounts related to grade, yield, 

quality, or specific characteristics of the 

animals or meat; the duration of the 

commitment to purchase or to contract 

for the production of animals; 

transportation requirements; delivery 

location requirements; delivery date and 

time requirements; terms related to who 

determines date of delivery; the 

required number of animals to be 

delivered; layout periods in production 

contracts; financing, risk-sharing, and 

profit-sharing; or terms related to the 

companies’ provision of inputs or 

services, grower compensation, or 

capital investment requirements under 

production contracts. 

AMS Response: AMS elected not to 

introduce a provision prohibiting the 

‘‘offering of contract terms that are less 

favorable than those generally or 

ordinarily offered’’ to its list of 

prohibited retaliatory actions as 

requested by a commenter because 

retaliation is principally focused on 

protecting producers from adverse 

actions by regulated entities in which 

they already have establish or recurring 

contractual relationships. The list of 

adverse actions in paragraph (b)(3) was 

designed to provide examples of the 

most common forms of retaliation as 

discrimination addressed by this rule. 

However, the proposed rule was 

intended and drafted broadly so as to 

ensure producers can engage in 

protected activities at all times and with 

all regulated entities in the marketplace. 

As described in Section V—Changes 

from the Proposed Rule, the final rule 

provides more specificity. Yet the final 

rule would still protect a producer 

against adverse treatment by a regulated 

entity which may be seeking to chill 

those activities across the marketplace— 

such as forming a producer association 

or asserting rights under the Act with 

other regulated entities—through the 

clarification that other actions that a 

reasonable covered producers would 

find materially adverse. 

Additionally, AMS accepts the 

commenters’ critique that the proposed 

regulatory text was insufficiently 

specific to provide clarity regarding 

when regulated entities could and could 

not take adverse actions against covered 

producers. In particular, AMS is 

concerned that the proposed contours 

regarding refusals to deal and nonrenewals offer regulated entities too 

great a latitude to engage in retaliation, 

because a regulated entity could, in 

theory, satisfy the proposed rule by 

simply offering highly unfavorable 

terms to the covered producer—which it 

could not do if the agency prohibited 

‘‘offering of contract terms that are less 

favorable than those generally or 

ordinarily offered.’’ That is not, 

however, the intent of the regulation. 

Rather, it is to ensure that covered 

producers, in whatever circumstance 

they enjoy, do not suffer retaliation for 

effectuating their rights under the Act. 

Accordingly, in the final rule, AMS 

has amended the provision to add 

several clarifying details. First, the final 

rule clarifies that requiring 

modifications or only offering to renew 

contracts on terms less favorable than 

those enjoyed by the covered producer 

is a violation where it occurs because 

the covered producer engaged in 

protected activities. This provision 

covers any adverse change to the 

covered producer’s terms to provide 

maximum flexibility to the covered 

producer to exercise protected rights 

regardless of the particular 

circumstances. Second, the final rule 

clarifies that a refusal to deal with 

covered producers would be triggered 

where the regulated entity fails to offer 

terms generally or ordinarily offered to 

other similarly situated covered 

producers. This provision does not 

guarantee the covered producer the 

most favorable contract terms in the 

market, but simply those that the 

covered producer would generally or 

ordinarily offer to other similarly 

situated covered producers that had not 

engaged in protected activities, which 

could include the situation previously 

enjoyed by the covered producer prior 

to having engaged in the protected 

activity. Such a provision is necessary 

because covered producers may enter or 

exit the market at different times, and 

during that period may engage in 

protected activities for which a 

regulated entity may attempt to retaliate. 

Together, AMS believes that these 

modifications cover the most common 

circumstances that covered producers 

may encounter in their business 

dealings in which regulated entities may 

attempt to exact retaliation. 

AMS is not including the level of 

detail sought by some commenters 

regarding the specific form of 

retaliation. This rule is intended to 

provide protections for adverse actions 

against a covered producer based upon 

the protected activity (including threats 

intended to chill engaging in that 

activity). Any inquiry should focus on 

those bases, rather than on the 

particular form of the discriminatory 

harm. AMS recognizes that unfavorable 


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contractual terms can cover a wide 

range of elements of a contractual 

relationship, such as prices, formulas, 

premiums or discounts, transportation 

provisions, delivery dates, duration, the 

required number of animals, 

arrangements such as financing, 

investment requirements or incentives, 

and other contractual specifications, 

among other terms and conditions. Such 

unfavorable terms may have direct 

financial impacts but may also have 

indirect financial impacts, such as 

reputational impacts which adversely 

affect the covered producer’s ability to 

conduct business in the marketplace. 

Providing further detail in the 

regulatory text is not necessary to 

enforce the rule. It is not practical to 

name all the different ways a malicious 

actor could find to retaliate. The rule is 

intended to capture as fully as possible 

the difference between a serious 

contract offer and an offer that has the 

practical intent to retaliate. 

Additionally, AMS confirms that 

when a regulated entity claims that 

modification or renewal of a contract on 

less favorable terms is common with 

similarly situated producers for reasons 

unrelated to any exercise of protected 

activities, AMS will not automatically 

consider the less favorable modification 

or renewal a violation of this particular 

rule. AMS will, however, review 

modification and renewal and will 

carefully examine the regulated entity’s 

justifications. Even outside of 

retaliation, unilateral modification of 

existing contracts has been a violation of 

the Act. The Act considers it an unfair 

and deceptive practice to modify an 

existing contract to either extend the 

time for payment or reduce the full 

price agreed upon at delivery. Moreover, 

contract modification has been a 

deceptive practice where the terms 

offered publicly were privately 

disavowed. 

x. Include Other Contract Terms That 

Could Affect Reprisal 

AMS requested comment on whether 

other contract terms should be included 

as part of including a non-exhaustive 

list of contract terms that could affect 

reprisal. 

Comment: An organization said AMS 

should provide examples of adverse 

actions that could constitute retaliation 

to help regulated entities comply with 

the Act. The commenter said that, for 

example, adverse actions for speaking 

out might include negative performance 

reviews; denial of bonuses; harassment 

or assault; reduced input quality; or 

increased scrutiny. The commenter said 

the proposed rule should cover adverse 

actions in contract terms such as 

impacts on price terms; formulas used 

for premiums or discounts related to 

grade or other characteristics of the 

animals or meat; duration of 

commitment to purchase or contract for 

the production of animals; 

transportation or delivery requirements; 

or terms related to companies’ provision 

of inputs or services, grower 

compensation, or capital investment 

requirements under production 

contracts. 

AMS Response: AMS recognizes that 

unfavorable contractual terms can cover 

a wide range of elements of a 

contractual relationship, such as prices, 

formulas, premiums or discounts, 

transportation provisions, delivery 

dates, duration, the required number of 

animals, arrangements such as 

financing, investment requirements or 

incentives, and other contractual 

specifications, among other terms and 

conditions. Such unfavorable terms may 

have direct financial impacts but may 

also have indirect financial impacts, 

such as reputational impacts which 

adversely affect the covered producer’s 

ability to conduct business in the 

marketplace. In the final rule, AMS has 

added paragraph (b)(3)(iv) to address 

any other adverse action that a 

reasonable covered producer would find 

materially adverse. This is intended to 

focus on material harms to covered 

producers, including threats, based on 

the protected activities. However, AMS 

is not including the level of detail 

sought by some commenters regarding 

the specific forms of retaliation, because 

providing further detail in the 

regulatory text is not necessary to 

enforce the rule. There are too many 

possibilities to encompass every 

possible retaliatory action in a single 

rulemaking. The Agency prefers the 

general prohibitions because their 

simplicity reaches a broad array of 

unlawful retaliatory activities, including 

the ones the commenter raises. 

xi. Specific Challenges or Burdens 

Regulated Entities Might Face in 

Complying With Anti-Retaliation 

Provisions of Proposed Rule 

AMS requested comment on what 

challenges or burdens regulated entities 

may face in complying with the 

proposed rule’s anti-retaliation 

provisions. 

Comment: Multiple industry groups 

argued the retaliation provisions are 

overly broad and vague, leading to 

compliance uncertainties and the threat 

of litigation. 

A cattle industry trade association 

said that AMS’s decision to allow 

violations of the proposed rule’s 

retaliation provisions without 

demonstrating harm to competition, 

along with ambiguous definitions letting 

a wide range of parties qualify as 

potential complainants, puts the cattle 

industry in danger of a huge wave of 

lawsuits that could thwart innovation. A 

swine industry trade association said 

the prohibited forms of retaliation listed 

in § 201.304(b)(3) include a broad range 

of activities that a regulated entity may 

have legitimate business reasons to 

carry out. According to the commenter, 

these prohibitions would restrict the 

rights of regulated entities to freely deal 

and require them to treat every producer 

the same, putting the proposed rule in 

conflict with the Act and with antitrust 

law. A poultry industry trade 

association and several live poultry 

dealers said that the list of activities that 

constitute retaliation is not exhaustive, 

so regulated entities have no way to 

know what activities they must avoid to 

comply with the rule. 

AMS Response: In this final rule, 

AMS has made a number of changes, 

outlined above in Section V—Changes 

from the Proposed Rule, to provide 

additional clarity, specificity, and 

certainty to market participants. These 

include switching prohibited conduct in 

§ 201.304(b)(3) from an exemplary list to 

a specific list of covered items. AMS 

rejects the general assertion that the 

provisions on retaliation are vague, 

ambiguous, or non-exhaustive. To the 

contrary, the final rule sets forth specific 

activities that are protected 

(§ 201.304(b)(2)) and specific conduct 

(§ 201.304(b)(3)) that would constitute 

retaliation if it were done because of the 

producer engaging the protected 

activities. As described above under 

Section V—Changes from the Proposed 

Rule, these included a range of further 

clarifications to the specific conduct. 

Notably, the inexhaustive list under 

paragraph (b)(3) has been refined, with 

paragraph (b)(3)(v) added to limit the 

list to any other adverse action that a 

reasonable covered producer would 

find materially adverse. 

The activities protected by this final 

rule each constitute an exercise of basic 

freedoms necessary and essential to 

maintain a free and competitive 

market—freedoms such as exercising 

contractual and legal rights, seeking 

recourse through governmental 

channels, forming cooperatives or 

associations relating to the business of 

livestock and poultry, and being a 

witness in court. Most regulated entities 

assert that retaliation for engaging in 

these types of activities is not a common 

practice in the industry. AMS finds that 

factually questionable, given the level of 

complaints and concerns expressed by 

producers over the years, including 


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experience in response to producers’ 

participation in hearings on competition 

by USDA and the DOJ in 2010. But to 

the extent that regulated entities stand 

by that position, then there should be 

little risk to regulated entities from 

litigation on the grounds of the activities 

protected in this rule. Regardless, AMS 

can identify no competitive benefits to 

adverse actions against covered 

producers for engaging in the activities 

protected by this final rule and can 

identify no genuine risks to contractual 

freedoms or ability to legitimately 

innovate from the activities protected by 

this final rule. 

AMS has further responded to the 

question of the costs and risks of 

litigation below. 

Comment: A swine industry trade 

association said that the retaliation 

provisions provide no guidance on 

legitimate business reasons to engage in 

the activities deemed as retaliatory 

conduct or on whose shoulders the 

burden of proving that a regulated 

entity’s conduct was ‘‘because of’’ the 

producer’s activity rather than based on 

a legitimate reason. A poultry industry 

trade association and several live 

poultry dealers said the proposed rule 

also does not clarify how to establish 

that a live poultry dealer, and the 

specific employees involved in grower 

contracting, knew that a grower had 

engaged in one of the protected 

activities. 

AMS Response: AMS has not 

identified any competitive benefits to 

adverse actions against covered 

producers for their having engaged in 

any of the protected activities set forth 

in this final rule. Accordingly, AMS has 

not provided any exemptions to the 

prohibition on retaliation against 

covered producers. If a regulated entity 

claims it has taken an adverse action 

against a covered producer for reasons 

unrelated to the producer’s exercise of 

rights protected by this final rule, it 

becomes a factual question of proof. The 

agency has the burden of showing that 

the regulated entity violated the rule by 

taking covered adverse actions against a 

producer or grower wholly or in part 

because of the producer’s or grower’s 

exercise of a protected right under the 

rule. Any such determination will turn 

heavily on the particular facts and 

circumstances of any claim. This factual 

determination is not a question of 

whether a legitimate business reason 

existed to engage in the retaliation; 

rather it is a question of whether a 

violation occurred at all. In some cases, 

it may be possible that the regulated 

entity, including in the form of its agent 

interacting with the covered producer, 

is genuinely not aware of the protected 

activity by the covered producer 

(including not having constructive 

knowledge, being willfully blind, or 

grossly negligent in its affairs), the 

adverse action would not constitute a 

violation. AMS does not expect, and 

indeed does not encourage, the 

regulated entity to engage in any 

monitoring activities to attempt to make 

itself aware of when covered producers 

may be engaging in these activities. In 

fact, the purpose of the rule is the 

opposite, and were AMS to identify a 

regulated entity engaging in any such 

monitoring program, it would likely 

view such activities as being in 

violation of this regulation owing to 

their likely effect of intimidating 

producers. 

Comment: A swine industry trade 

association said the proposed rule 

would allow producers who engage in 

common conduct, such as joining a 

cooperative or asserting their rights 

under a contract, to claim that a 

regulated entity engaged in retaliation 

by terminating a contract or giving 

differential treatment to a producer. A 

poultry industry trade association and 

several live poultry dealers said the 

retaliation provisions create a 

presumption that all grower protected 

activities are legitimate, which could 

open the door to strategically planned 

actions by poor performing growers 

designed to trigger these protections and 

would lead to especially severe risks if 

a grower has committed animal welfare 

violations. 

AMS Response: AMS rejects the 

assertion that the rule would permit or 

encourage gaming by producers to avoid 

accountability for poor performance or 

violations of animal welfare guidelines. 

This final rule clearly specifies that the 

adverse action must be taken based on 

the producer participating in such 

protected activities. The mere 

coincidence, or correlation, between a 

producer joining an association or 

reporting to the government and then 

experiencing an adverse action is not 

enough for a violation. There must be 

evidence showing the adverse action 

taken by a regulated entity was in 

response to the producer engaging in a 

protected activity for a violation to be 

exist. 

Additionally, AMS rejects the 

comment that the regulated entity 

would face a burden because it would 

not know which protected activities the 

producer has engaged in. The purpose 

of the rule is for the regulated entity to 

not adversely treat producers based on 

their participation in protected 

activities. 

Comment: A poultry industry trade 

association and several live poultry 

dealers said the proposed rule also does 

not provide clarity regarding 

cooperative activity: live poultry dealers 

would still need to select which specific 

growers to contract with, choose where 

to place birds, and evaluate and approve 

housing and other grow-out 

specifications even if growers form 

cooperatives, but the proposed rule does 

not provide guidance on whether a 

regulated entity making these decisions 

might be considered to be engaging in 

retaliation. 

AMS Response: A cooperative is a 

well understood legal status under the 

Co-Operative Marketing Associations 

(Capper-Volstead) Act of 1922 (Pub. L. 

67–146) and protected by the 

Agricultural Fair Practice Act of 1967, 

which the proposed and final rule have 

both referenced. Generally, a 

cooperative is an organization 

established by individuals to provide 

themselves with goods and services or 

to produce and dispose of the products 

of their labor. The property of a 

cooperative, including the means of 

production and distribution, are 

typically owned in common. The final 

rule covers activities inherent in the 

planning and organization of a 

cooperative. 

AMS also rejects the comment that 

live poultry dealers would still need to 

determine how to treat particular 

growers when dealing with a 

cooperative. Cooperatives are 

independent entities, and the live 

poultry dealer would enter in a contract 

with the cooperative as a whole, rather 

than with any individual grower. The 

terms of the general contract would 

govern the relationship between the live 

poultry dealer and the cooperative. 

Generally, a cooperative is an 

organization established by individuals 

to provide themselves with goods and 

services or to produce and dispose of 

the products of their labor. The property 

of a cooperative, including the means of 

production and distribution, are 

typically owned in common. This rule 

prohibits live poultry dealers from 

discrimination against a cooperative 

because it is a cooperative or from 

retaliating against producers for forming 

a cooperative. Because a cooperative is 

an entity, a regulated entity cannot 

assert that they are dealing with a 

cooperative but then limit the agreement 

to individuals. 

Comment: A poultry industry trade 

association and several live poultry 

dealers urged AMS to introduce 

exceptions to the proposed rule’s 

protection of information sharing 

activities under § 201.304(b)(2)(iv) and 

(v) that would cover confidential or 

proprietary information, saying that the 


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unauthorized release of confidential 

business information can harm 

businesses substantially and irreparably 

and therefore companies act legitimately 

in exercising their contractual rights to 

protect this information. 

AMS Response: This rule will not 

create exceptions to existing laws 

governing the sharing of information 

between members of associations and 

cooperatives. Information sharing by 

associations remains governed by the 

Federal antitrust laws and other relevant 

laws. Certain conduct by cooperatives is 

exempt from the Federal antitrust laws. 

This rule does not change whether these 

activities are lawful and protected, or 

prohibited, under Federal law. AMS 

makes no changes in response to this 

comment. 

xii. Other Comments on Retaliation 

Comment: A whistleblower advocacy 

organization suggested several changes 

to expand the proposed rule’s coverage. 

First, it recommended AMS extend the 

proposed rule’s anti-retaliation 

protection to all natural or legal persons 

who provide information they 

reasonably believe is evidence of a 

violation of the Act or who refuse to 

take action they reasonably believe 

would violate the Act. According to the 

commenter, protected persons should 

include, but not be limited to, 

employees of meatpackers and 

integrators reporting violations of the 

Act; employees, contractors, and 

subcontractors of protected farmers or 

ranchers; and associates and relatives of 

protected persons or entities. Second, 

the commenter said that AMS should 

clarify language in the proposed rule 

stating that it does not protect farmers 

and ranchers acting in contravention of 

the Act from retaliation. According to 

the commenter, the final rule should 

exclude from protection only 

individuals acting without express or 

implied direction from the covered 

entity or its agent, and who deliberately 

and willfully cause a violation of any 

requirement relating to any violation or 

alleged violation under the Act. The 

commenter said this clarification would 

ensure that live poultry dealers cannot 

use this provision to attack farmers 

under broiler production contracts who 

engage in whistleblowing. According to 

this commenter, these contractors are 

subject to extreme corporate control that 

denies them the right to act under their 

own agency, so it would not be fair to 

exclude them from the protections 

against retaliation based on actions they 

could not control. 

This commenter also said that, 

because farmers are often unfamiliar 

with protections that apply to their 

exposure of industry wrongdoing, 

USDA must make efforts to share 

information about producer rights and 

company responsibilities at the 

beginning of the contractual 

relationship as well as throughout the 

engagement. The commenter suggested 

that AMS host educational 

programming about rights under the Act 

and develop language-appropriate 

educational material. The commenter 

urged USDA and DOJ to continue to 

offer anonymous protected disclosures 

through their joint portal and be 

transparent about subsequent regulatory 

and enforcement activity, saying most 

producers prefer to make reports 

anonymously or through another party 

to avoid retaliation. 

AMS Response: In this rule, AMS is 

principally focused on providing robust 

protections for covered producers 

participating in the market. 

Accordingly, AMS has not amended the 

regulatory text to extend the rule’s 

coverage to all natural or legal persons 

who provide information regarding 

perceived violations of the Act or who 

refuse to take action they believe would 

violate the Act. AMS has, however, 

revised the regulatory text of 

§ 201.304(b)(2)(i) to extend the coverage 

from a covered producer’s 

communication ‘‘with a government 

agency’’ to communication ‘‘with a 

government entity or official’’ and from 

‘‘petitions for redress of grievances 

before a court, legislature, or 

government agency’’ to ‘‘petitioning a 

government entity or official for redress 

of grievances.’’ AMS believes that this 

change ensures that protected 

communications may occur with any of 

the three branches of the Federal 

government and with individual 

government officials, including 

committees or members of a legislature. 

The regulation applies equally to 

communications with all levels of 

government—Federal, State, and local— 

with respect to the matters indicated. 

Furthermore, AMS is sympathetic to 

and broadly in agreement with the 

commenter’s perspective that covered 

producers should not be required to 

understand the precise contours of the 

Act to exert their protected activity 

rights, and that they should be enjoyed 

heightened protection when acting at 

the express or implied direction of a 

regulated entity. Regulated entities have 

no motive to purposefully induce 

producers to commit unlawful acts. If a 

regulated entity induces criminal 

activity, irrespective of retaliation, this 

inducement may be deceptive within 

the meaning of the Act. 

AMS appreciates the commenter’s 

advocacy regarding the need for 

continuing USDA-sponsored education 

regarding producer rights and company 

responsibilities under the Act. AMS is 

taking steps to increase producer 

education and outreach, including, for 

example, establishing the 

farmerfairness.gov portal to facilitate 

ease of access for submitting 

complaints. AMS intends to expand 

education and outreach regarding this 

rule and other regulatory requirements. 

F. Recordkeeping (§ 201.304(c)) 

AMS proposed a recordkeeping 

requirement that records related to 

compliance with this rule be kept for a 

period of five years from the date of 

record creation. These records include 

policies and procedures, staff training 

materials, materials informing covered 

producers about reporting mechanisms 

and protections, compliance testing, 

board of directors’ oversight materials, 

and records about the nature of 

complaints received relevant to 

prejudice and retaliation. AMS stated 

the purpose of this proposal was to 

reduce the threat of retaliation and to 

enhance AMS’s ability to investigate 

and secure enforcement against undue 

prejudice and unjust discrimination. 

i. Appropriateness of Proposed 

Regulation’s Recordkeeping Obligations 

To Permit AMS To Monitor Regulated 

Entities for Compliance 

AMS requested comment on whether 

the proposed recordkeeping obligations 

were appropriate to allow AMS to 

monitor regulated entities for 

compliance. 

Comment: A group of State attorneys 

general and several organizations 

generally supported the proposed 

recordkeeping obligations in order to 

enhance compliance by regulated 

entities and enhance AMS’s ability to 

monitor them for discriminatory 

treatment. 

Other commenters supported the 

proposed recordkeeping requirements, 

but suggested AMS should require 

regulated entities to maintain additional 

specific records. A cattle industry trade 

association said AMS should require 

retention of any records that include 

specific terms (including prices paid) of 

purchase agreements or contracts, as 

well as any methodologies used to 

calculate premiums or discounts paid to 

producers. This commenter argued that 

such records would enable AMS to 

evaluate differential treatment. An 

agricultural advocacy organization made 

a similar suggestion for regulated 

entities to maintain income/payment 

formulas and pre-contract discussions 

with producers as part of their 

recordkeeping obligations. 


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AMS Response: AMS takes note of the 

commenters’ support for the usefulness 

of the provisions. With respect to the 

request that AMS revise the rule to 

identify specific records that regulated 

entities must retain, AMS notes that the 

regulation as proposed provides 

flexibility for a regulated entity to retain 

any records relevant to its compliance 

with § 201.304(c), including records not 

specifically referenced in the regulation. 

Under sec. 401 of the Act, regulated 

entities are already required to maintain 

the accounts, records, and memoranda 

necessary to fully and correctly disclose 

all transactions involved in their 

business. USDA’s implementing 

regulations can be found at 9 CFR 

201.94, 201.95, and 203.4. Existing 

regulations under part 201 require 

regulated entities to give the Secretary 

‘‘any information concerning the 

business . . .’’ (§ 201.94) and provide 

authorized representatives of the 

Secretary access to their place of 

business to examine records pertaining 

to the business (§ 201.95). Section 203.4 

regulates the types of records that must 

be kept by regulated entities and the 

timelines for disposal of these records. 

As part of its enforcement capabilities 

under sec. 401 of the Act, AMS can 

inspect the records of regulated entities 

to review detailed information related to 

purchases and ensure that regulated 

entities are in compliance. Because 

these records are already required under 

existing law, AMS made no further 

changes in response to the comments. 

Comment: A poultry industry trade 

association argued that the proposed 

recordkeeping regulation—as written— 

is not appropriate because it is vague 

and does not make clear that it only 

requires integrators to maintain records 

relevant to proposed § 201.304(a) and 

(b). The trade association contended 

that the rule should make explicit that, 

if a regulated entity does not maintain 

records relevant to those respective 

proposals, no recordkeeping is required. 

The commenter also recommended 

exempting privileged communications 

or attorney work product from the 

recordkeeping requirement. 

AMS Response: AMS disagrees with 

the commenter’s view that the 

regulation as proposed does not make 

clear that regulated entities are only 

required to maintain records relevant to 

proposed § 201.304(a) and (b): the 

regulation as proposed specifically 

stated that a regulated entity ‘‘shall 

retain all records relevant to its 

compliance with paragraphs (a) and (b) 

of this section.’’ Further, AMS does not 

believe it necessary to specify that 

certain records do not need to be 

retained if they are irrelevant because 

the regulatory text states explicitly that 

the recordkeeping requirement applies 

only to records relevant to a regulated 

entity’s compliance with this section. 

Under the Act and existing PSD 

regulations, regulated entities are 

required to keep records pertaining to 

their business. To comply with the 

proposed regulation, a regulated entity 

must retain all records relevant to its 

compliance with § 201.304(a) and (b) for 

no less than five years from the date of 

record creation. Lastly, AMS does not 

believe that adding an exemption for 

privileged communication, such as 

attorney work product, is necessary 

because attorney work product is 

already protected from disclosure under 

current law. Therefore, AMS makes no 

changes to the rule in response to this 

comment. 

ii. Requirements for Regulated Entities 

To Produce and Maintain Specific 

Policies, Compliance Practices, or 

Disclosures To Help Ensure Compliance 

With Undue Prejudice and AntiRetaliation Provisions 

AMS requested comment on whether 

the proposal should require regulated 

entities to produce and maintain their 

specific policies and procedures, 

compliance practices or certifications, 

or disclosures to ensure compliance 

with the undue prejudices and 

provisions and anti-retaliation 

provisions in the proposed rule. 

Comment: Several commenters 

expressed concern that the proposed 

recordkeeping requirement would not 

be sufficient to ensure compliance. One 

organization argued that AMS should 

require regulated entities to proactively 

identify and record the basis of 

differential treatment (e.g., differences 

in prices paid) among producers. An 

academic or research institution 

concurred, suggesting that any 

differential treatment in price or 

contract terms should be justified by 

regulated entities in their records. 

An agricultural and environmental 

organization proposed regulated entities 

should be subject to an Annual 

Compliance Report to AMS that requires 

a detailed list of all their transactions. 

This list would include, specifically: (1) 

an anonymized list of producers the 

regulated entity did business with; (2) 

terms offered to producer during 

contract negotiations; (3) terms entered 

with producer and whether these terms 

differ with similarly situated producers; 

(4) prices paid to producers and 

methodology for the price; (5) whether 

AMAs were used; and 6) accounts of all 

instances of the regulated entity’s 

refusal to deal with a producer and 

justification for the refusal. The 

commenter argued that it will be 

difficult for producers or AMS to prove 

violations of proposed § 201.304(a) 

without these detailed disclosures. 

An agricultural advocacy organization 

proposed requiring regulated entities to 

report to AMS the contract terms and 

payments made to producers, as well as 

producer demographic information 

necessary to determine which producers 

are market vulnerable individuals. The 

commenter argued this was necessary to 

put the burden of enforcement of the 

new rule on AMS and regulated entities 

rather than covered producers. This 

commenter also suggested requiring 

regulated entities to use a uniform 

recordkeeping system that tracks and 

reports ‘‘relevant data’’ to allow AMS to 

monitor for potential differential 

treatment or discrimination. This 

commenter likened the proposed system 

to the Home Mortgage Disclosure Act, 

which allows regulators to use data from 

regulated entities to ensure compliance 

with fair housing laws. 

AMS Response: AMS is making no 

changes to the rule as proposed based 

on this comment. AMS believes that the 

regulation as proposed permits 

flexibility for regulated entities to 

determine which records best 

demonstrate compliance with § 201.304. 

Such an approach is appropriate, given 

that this rule regulates the poultry, 

cattle, and swine industries, and that 

regulated entities vary in size and in the 

nature of their business operations. 

Regulated entities may have an existing 

recordkeeping system in place that is 

suited to their industry, size, or business 

operation. The proposed regulation’s 

flexibility regarding the types of records 

that must be kept will ensure that the 

array of regulated entities covered by 

this rule can choose the method of 

compliance most relevant to their 

circumstances; the proposed 

regulation’s specification that a 

regulated entity must retain all records 

relevant to their compliance with 

§ 201.304(a) and (b) will aid in PSD’s 

enforcement of paragraphs (a) and (b). 

As noted above, under sec. 401 of the 

Act, AMS is authorized to conduct 

compliance inspections, which may 

include examination of information 

related to differences in purchases and 

prices. AMS also has the power under 

sec. 6 of the FTC Act to require reports 

from corporations on a case-by-case 

basis. The additional reporting 

requirements suggested by commenters 

are outside the scope of this rulemaking, 

but AMS reserves the right to consider 

those approaches in future rulemakings. 

Comment: A poultry industry trade 

association and several live poultry 

dealers said AMS should identify 


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194Section 201.94 of the regulations requires 

regulated entities to give the Secretary ‘‘any 

information concerning the business . . .’’ Section 

201.95 of the regulations requires that regulated 

entities provide authorized representatives of the 

Secretary access to their plaice of business to 

examine records pertaining to the business. 

specific records that need to be kept or 

generated, arguing that without specific 

guidance regulated entities will be left 

guessing which records are relevant to 

its compliance obligations. 

AMS Response: As noted in the 

response above, this rule regulates a 

wide array of entities. Regulated entities 

may have an existing recordkeeping 

system in place that is suited to their 

industry, size, or business operation. 

Also as noted above, existing 

regulations and the Act require 

regulated entities to keep records of 

their business operations, subject to 

AMS compliance investigations. The 

regulation as proposed provides the 

flexibility for regulated entities to keep 

the types of records they deem 

appropriate to demonstrate their 

compliance with § 201.304, rather than 

requiring all regulated entities to keep 

the same set of records that may not be 

relevant to how they run their 

businesses. Paragraph (c)(2) provides a 

non-exhaustive list of examples of the 

types of records that may be relevant for 

a regulated entity to demonstrate 

compliance with § 201.304(a) and (b). 

AMS is making no changes to the rule 

as proposed based on this comment. 

iii. Specific Challenges or Burdens 

Regulated Entities Might Face in 

Complying With Recordkeeping Duties 

of Proposed Rule 

AMS sought comment on what 

specific challenges regulated entities 

may face in complying with the 

recordkeeping duties of the proposed 

rule. 

Comment: A poultry industry trade 

association and several live poultry 

dealers said that the proposed 

recordkeeping rule was overly broad, 

such that regulated entities would need 

to document and maintain every 

document related to interactions with 

producers (such as emails, visits, or 

notes from calls or meetings). The 

commenters raised concerns that this 

obligation would impose an 

overwhelming administrative burden 

and exorbitant compliance costs on 

regulated entities, which would be 

compounded by the 5-year record 

maintenance requirement. They 

suggested reducing the requirement 

period to two years. An agricultural 

association shared these concerns, in 

particular around the possibility that 

communications with any person about 

potentially entering into a contract may 

be deemed relevant under the rule and 

that, as such communications could be 

directed at any employee, a regulated 

entity could have to maintain records of 

all communications with its employees 

for a period of five years. This 

commenter said, if USDA interprets the 

recordkeeping requirements in this 

broad manner, would impose a 

particular burden on smaller entities 

subject to the recordkeeping 

requirement since these entities lack the 

administrative or IT infrastructure 

necessary to comply. A legal foundation 

also posited that the recordkeeping 

proposal would impose significant costs 

on regulated entities and—to reduce 

their burden—urged AMS to impose a 

warrant requirement before requiring 

disclosure of records. 

AMS Response: AMS is making no 

changes to the regulation as proposed. 

The recordkeeping requirement in this 

rule is not new. PSD currently has 

recordkeeping authority through the Act 

and its existing regulations, including 

sec. 401 of the Act, and 9 CFR 201.94, 

201.95, and 203.4. Further, AMS subject 

matter experts—economists and 

supervisors with years of experience in 

AMS’s PSD conducting inspections and 

compliance reviews—have estimated 

the recordkeeping costs associated with 

this rule to be relatively low. They have 

estimated that recordkeeping costs 

would be correlated with the size of the 

regulated entity, with the assumption 

that the hour burden would be highest 

for the largest entities. Therefore, at the 

highest end of the spectrum, AMS has 

estimated that annual recordkeeping 

compliance costs for the largest 

regulated entities would average of 4 

hours of administrative assistant time 

and 1.5 hours of time each for managers, 

attorneys, and information technology 

staff in the first year. Thereafter, for the 

largest entities, annual recordkeeping 

compliance costs would average 3 hours 

per year of administrative assistant time, 

1.5 hours per year of manager and 

attorney time, and 1.00 hour of time 

from information technology staff. As 

stated previously, AMS estimates that 

the hour burden would decrease 

proportionate to the size of the entity. 

AMS also notes that some firms might 

not have any records to store, while 

other firms may already store relevant 

records and may have no new costs 

associated with this rule. It also notes 

that the list of suggested records in 

§ 201.304(c)(2) is illustrative and that 

regulated entities are not required to 

document and maintain all of these 

records. Therefore, AMS estimates that 

the compliance costs associated with 

this rule will be relatively low and, as 

these costs are likely to vary in 

proportion to the size of the regulated 

entity, smaller entities are unlikely to 

face particular burdens. The objective of 

the recordkeeping requirement is to 

support USDA monitoring efforts as 

well as to preserve the flexibility of 

allowing regulated entities to decide 

how best to comply with the rule. It is 

incumbent upon regulated entities to 

decide which records are relevant for 

rule compliance. 

AMS is also declining to revise the 

regulation to limit the record retention 

requirement to two years. AMS believes 

that requiring that records be retained 

for five years from their creation date 

will enable the agency to monitor the 

evolution of compliance practices over 

time in this area and will ensure that 

records are available for what may be 

complex evidentiary cases. AMS will 

not be adding a warrant requirement to 

the rule at this time because the Agency 

already has jurisdiction under the Act to 

request documents concerning a 

regulated entity’s business and therefore 

no warrant is required to do so under 

governing law.194

iv. Ways in Which Recordkeeping 

Duties Differ From Existing Policies, 

Procedures, and Practices of Regulated 

Entities 

AMS requested comment on how the 

proposed recordkeeping duties may 

differ from the current policies, 

procedures, or practices of regulated 

entities. 

Comment: A poultry industry trade 

association and several live poultry 

dealers argued that the proposal to 

include board of directors and other 

corporate governance materials as a 

matter of routine compliance with the 

Act is not typical of compliance records 

maintenance. The commenters 

suggested that these materials would not 

be helpful in demonstrating violations 

of the proposed rule, and their inclusion 

may be an attempt to create liability for 

executives or board members for 

everyday regulatory requirements. 

AMS Response: AMS is making no 

changes to the rule as proposed based 

on this comment. The rule does not 

require regulated entities to maintain 

board of directors’ materials. These 

materials are referenced in the rule as an 

example of the types of records that may 

be relevant for a regulated entity to 

demonstrate that it has complied with 

§ 201.304(a) and (b). Therefore, 

regulated entities are not required to 

retain these materials. However, AMS 

notes that the conduct of executives and 

board members is a critical component 

in establishing a corporate culture of 


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compliance. As noted previously, a 

culture of compliance is a critical tool 

for preventing legal and regulatory 

violations and a first step toward more 

inclusive market practices. 

G. Deceptive Practices (§ 201.306) 

AMS proposed to prohibit regulated 

entities from participating in several 

types of deceptive practices with respect 

to livestock, meats, meat food products, 

livestock products in unmanufactured 

form, or live poultry. These relate to 

contract formation, performance, 

termination, and refusal. 

i. Accuracy and Adequacy of Proposed 

Regulations in Identifying Recurrent 

Deceptive Practices in Livestock and 

Poultry Industries 

AMS requested comment on whether 

the proposed regulations accurately and 

adequately identify recurrent deceptive 

practices in the livestock and poultry 

industries, as well as whether any areas 

of deception may be missing. 

Comment: Commenters including a 

group of State attorneys general, several 

organizations, and an academic 

institution indicated support for the 

deceptive practices provisions, with one 

commenter saying the provisions would 

clarify the duties of regulated entities to 

engage in honesty and market integrity. 

Two agricultural advocacy 

organizations recommended that, in 

addition to the four broad prohibitions 

on behavior enumerated under 

proposed § 201.306, AMS should 

provide a non-exhaustive list of 

prohibited conduct known to harm 

producers, saying this measure would 

provide clear guardrails and foster 

quicker termination of abusive practices 

against producers. These commenters 

also said the deception provisions of the 

proposed rule fall well within AMS’s 

authority under the Act, noting that 

Congress gave USDA broad powers 

under the Act with the intention of 

halting unfair trade practices against 

producers before producers suffer actual 

harm. 

AMS Response: AMS is making no 

changes to the rule as proposed. AMS 

appreciates the views expressed by 

commenters but believes specifying the 

duties of regulated entities to engage 

honestly and itemizing prohibited 

deceptive practices adds unnecessary 

complexity. Firstly, specific guidance as 

to what constitutes deceptive practices 

can be taken from existing regulations in 

9 CFR part 201, such as: §§ 201.49 and 

201.71 (requiring honesty in weighing); 

§ 201.53 (requiring honesty in 

representation of market conditions or 

prices); § 201.98 (requiring honesty in 

collection of fees); § 201.67 (prohibiting 

deception regarding the nature of packer 

and selling agency business 

relationships); and § 201.217 (requiring 

transparency regarding breach of 

contract determinations). Secondly, in 

the event deception occurs in ways 

actionable under sec. 202(a) of the Act, 

yet that violation is not specifically 

covered by this rule, AMS will look to 

the legislative history and case law of 

the Act to guide its handling of these 

matters. For example, obvious 

falsehoods, such as false weighing and 

false accounting have always been 

considered deceptive practices under 

sec. 202(a) of the Act. Therefore, AMS 

believes it is not necessary to itemize 

such practices in this particular section. 

Lastly, AMS underscores that this rule 

is intended to provide a broad array of 

coverage regarding the general 

circumstances that encourage the 

provision of false or misleading 

information. Facts and circumstances 

are unique to every case and may vary 

significantly; therefore, AMS has 

determined to retain the four broad 

prohibitions on behavior under 

§ 201.306 as initially proposed. 

Comment: A poultry industry trade 

association said all actions prohibited 

under proposed § 201.306 are already 

addressed in sec. 202(a) of the Act, 

which prohibits regulated entities from 

engaging in unfair, unjustly 

discriminatory, or deceptive practices or 

devices. 

AMS Response: AMS is making no 

changes to the rule as proposed based 

on this comment. AMS agrees that the 

prohibitions established by this rule are 

well within the scope of sec. 202(a) of 

the Act. This rule is designed to help 

producers better understand what 

behavior constitutes a violation of sec. 

202(a). Based on complaints and 

comments from stakeholders over the 

years, as well as in response to the 

proposed rule, AMS is aware that 

deceptive practices continue to harm 

producers and market integrity. Thus, 

AMS has determined it necessary to 

codify in its regulations deceptive 

practices prohibited under sec. 202(a) of 

the Act to better ensure that producers 

benefit from the protections intended by 

the passage of the Act. 

ii. Specific Deceptive Practices 

AMS proposed prohibiting regulated 

entities from: 

• Making or modifying a contract by 

employing a pretext, a false or 

misleading statement, or an omission of 

a material fact necessary to make a 

statement not false or misleading 

(§ 201.306(b)). 

• Performing under or enforcing a 

contract by employing a pretext, false or 

misleading statement, or omission of 

material fact necessary to make a 

statement not false or misleading 

(§ 201.306(c)). 

• Terminating a contract or taking 

any other adverse action against a 

covered producer by employing a 

pretext, false or misleading statement, or 

omission of material fact necessary to 

make a statement not false or misleading 

(§ 201.306(d)). 

• Providing false or misleading 

information to a covered producer or 

association of covered producers 

concerning a refusal to contract 

(§ 201.306(e)). 

Comment: An agricultural advocacy 

organization suggested the final rule’s 

explanatory text should clarify that 

deceptive practices related to contract 

formation also include the making of 

false or misleading statements to 

prospective producers on the benefits of 

a contractual relationship with a 

regulated entity. The commenter said 

that this clarification would, for 

example, better address circumstances 

such as representatives of live poultry 

dealers who make verbal claims to 

prospective growers about benefits not 

reflected in the actual contract the 

grower later receives to sign. 

AMS Response: AMS is not making 

the specific changes to proposed 

§ 201.306(b) requested in this comment 

but is making changes to this paragraph 

to clarify the range of deceptive conduct 

prohibited during contract formation. 

AMS agrees with the commenter 

regarding the harm of false statements in 

contract formation. AMS formulated 

§ 201.306(b) specifically to address the 

making of false statements in contract 

formation. The revised regulation states 

that not only is a regulated entity 

prohibited from employing a ‘‘false or 

misleading statement’’ but it also may 

not omit ‘‘material information 

necessary to make a statement not false 

or misleading.’’ Therefore, AMS 

believes the regulation encompasses the 

protection against misleading 

statements requested by the commenter. 

AMS will address the specific 

circumstances raised by the commenter 

via other rulemakings. 

Comment: An agricultural advocacy 

organization pointed out a potential 

discrepancy, saying the range of 

deceptive behavior in contract 

formation, performance, and 

termination covered in § 201.306(b) 

through (d) of the proposed rule as 

drafted appears narrower than that 

contemplated in the proposed rule’s 

preamble. The commenter noted that 

the preamble said USDA generally 

approaches deceptive practices from the 

perspective of a reasonable party 


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195 87 FR 60010, 60032, 60034, October 3, 2022. 

receiving them and asks whether they 

would affect the conduct or decision of 

a reasonable recipient of these practices 

and asserts that the Act reaches beyond 

common-law fraud to affirmatively 

require honest dealing and truthfulness 

in the marketplace.195 The commenter 

said that, if AMS intended the 

description in the preamble to 

encompass a broader range of deceptive 

behavior than that in the proposed 

rule’s current language, it should 

broaden the language in § 201.306(b) 

through (d) of the proposed rule to 

prohibit any practices likely to mislead 

a covered producer, acting reasonably 

under the circumstances, to the 

producer’s detriment. 

AMS Response: There is not a 

contradiction or discrepancy between 

the preamble and the proposed 

regulation. The preamble discusses 

deception more generally, providing 

background on AMS’s approach to 

implementing the prohibition on 

deceptive practices and its legal 

authority to do so under sec. 202(a) of 

the Act. The regulatory text is designed 

to provide example prohibited 

deceptions under the Act. It is not 

designed to enumerate every 

circumstance that may be a prohibited 

deceptive practice under the Act. There 

are circumstances where a deceptive 

practice could be covered under sec. 

202(a)’s prohibition on deceptive 

practices even if that practice is not 

expressly addressed by this final rule. 

AMS chose not to provide an exhaustive 

coverage of every possible circumstance 

that could be a deceptive practice 

because such an effort would be 

unwieldly as a matter of rulemaking and 

likely offer little benefit to producers in 

terms of making the protections of the 

Act concrete and understandable. Such 

an effort would require such breadth of 

coverage and flexibility in application 

as to effectively replicate the 

interpretive process that is needed to 

analyze deceptive practices under the 

Act, which may vary significantly 

depending on the facts and 

circumstances of each case. In this rule, 

AMS has instead chosen to strike a 

balance, and is offering clear protection 

for a broad range of commonly 

encountered circumstances. AMS notes 

that the regulatory text in paragraphs (b) 

through (d) does include a prohibition 

on employing a ‘‘false or misleading 

statement.’’ Therefore, AMS is making 

no changes to the regulation as 

proposed. 

Comment: Agricultural advocacy 

organizations urged AMS to expand and 

clarify the proposed rule’s prohibition 

on deceptive conduct during contract 

refusal, saying regulated entities can use 

this tactic to manipulate producers, as 

they may do with contract termination. 

The commenters gave the example of a 

dominant buyer who only wants to 

purchase cattle from producers locked 

into AMAs, rather than those selling on 

a negotiated cash market, so it can pay 

lower than fair market value. If this 

buyer simply tells producers on the 

open cash market that it does not need 

their cattle, this statement may not 

necessarily be false or misleading, but it 

would be a pretextual justification for 

refusing to deal with them. A cattle 

industry trade association also urged 

AMS to ban the practice of refusing to 

buy a producer’s cattle in the negotiated 

cash market unless the producer agrees 

to enter a forward contract, saying this 

practice is so widespread that it is 

common knowledge among cattle 

producers that packers who say they do 

not need their cattle are tacitly 

providing them with an ultimatum. 

Several commenters recommended 

the following amended regulatory text, 

with changes in bold: 

‘‘(e) Contract refusal. A regulated 

entity may not rely on a pretext or 

provide false or misleading information 

to a covered producer or association of 

covered producers concerning a refusal 

to contract.’’ 

AMS Response: AMS has designed 

the prohibition on deceptive practices 

in refusal to contract differently than the 

prohibition for other circumstances 

because the relationship between a 

regulated entity and a covered producer 

differs in this circumstance. During 

contract formation, performance, or 

termination, there is a high degree of 

reliance by the covered producer on the 

regulated entity, owing to the existence 

of the contract. In a refusal-to-contract 

circumstance, however, the reliance is 

limited principally to the denial of the 

opportunity to transact. In general, 

regulated entities may refuse to contract 

with a covered producer for any reason 

or no reason at all, unless the reason is 

impermissible under the Act. This final 

rule’s prohibition on deception seeks to 

ensure that any reasons provided by the 

regulated entity to the producer are 

truthful and not misleading. Failure to 

provide such truthfulness is deceptive 

because, given the high levels of vertical 

integration and horizonal concentration, 

producers lack marketing options and 

thus heavily depend on regulated 

entities for market integrity and, 

ultimately, the information needed to 

compete effectively. Producers are 

harmed when they cannot evaluate their 

competitive opportunities in an honest, 

objective manner. While the USDA 

Extension Service and other third 

parties may assist producers in 

appreciating their competitive strengths 

and weaknesses, ultimately the signals 

sent by packers are critical for 

competitive opportunities. 

The final rule does not include 

‘‘pretext’’ or ‘‘omission of material fact 

necessary to make a statement not false 

or misleading’’ in this refusal to contract 

provision because refusals to contract 

may occur for any number of reasons, 

and regulated entities may not always 

be in a position to reveal the reason for 

a refusal to contract. There may be 

economic, social, community, or even 

simply polite reasons for offering an 

incomplete, if not untruthful, reason for 

a refusal to contract. As long as a 

regulated entity is not providing false or 

misleading information to a covered 

producer or omitting material 

information, it will not run afoul of 

§ 201.306(e). 

AMS appreciates the commenter’s 

concerns regarding the use of forward 

contracts. However, including a specific 

prohibition regarding this practice was 

not under consideration in the proposal. 

With this rulemaking, AMS is 

implementing regulations to provide a 

broad array of coverage against 

deceptive practices during various 

stages of the contracting process. 

Deceptive acts in contract refusal will be 

determined on a case-by-case basis 

based on the facts and circumstances of 

each individual case. In the example 

raised by the commenter, were a packer 

to refuse to purchase cattle in the cash 

market and state that its plant has 

acquired all the cattle it needs, the 

packer would not run afoul of the final 

rule if that statement was true. However, 

were the packer to make such a 

statement but would be willing—or 

attempt—to purchase the cattle under a 

different marketing arrangement, that 

would suggest that the information 

provided was false or misleading and 

the packer would run afoul of the final 

rule. If the cattle were of a quality or 

type that the packer does not want and 

the packer has already acquired all the 

cattle it needs for a given week, the 

packer could state that it is full without 

telling the covered producer its real 

reason for refusing to purchase cattle— 

again, as long as the statement provided 

is truthful. 

Accordingly, AMS is not making any 

changes to the regulation as proposed in 

response to these comments. 

iii. Recurrent Deceptive Practices Not 

Adequately Addressed by Proposed 

Regulations 

AMS asked whether there were 

recurrent deceptive practices not 


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196See U.S. v Cargill Meat Solutions Corp., et al. 

at https://www.justice.gov/d9/2023-11/418169.pdf. 

adequately addressed by the proposed 

regulations. 

Comment: Several organizations 

recommended AMS add the clause ‘‘but 

is not limited to’’ to § 201.306(a) to 

provide flexibility regarding other 

deceptive actions that may arise. 

AMS Response: AMS is not adopting 

the recommendation. ‘‘Not limited to’’ 

language is unnecessary, as paragraphs 

(b) through (e) of this section are not 

stated as being exhaustive. This 

regulation is not designed to, and 

should not be read to, create an 

exclusive or exhaustive set of instances 

of deceptive practices. This rulemaking 

is intended to provide guidance to 

covered producers for how to effectuate 

their rights under the Act by 

implementing regulations that provide a 

broad array of coverage against 

deceptive practices during various 

stages of the contracting process. Future 

rulemaking or enforcement actions 

would not be restricted to the conduct 

identified in § 201.306 when dealing 

with deception, as the Act’s coverage is 

broader than this final rule. 

Comment: An agricultural advocacy 

organization recommended that AMS 

address common cattle contracting 

practices that enable regulated entities 

to consolidate their power, expand their 

profit margins, and shift their risks to 

producers, particularly those practices 

facilitated by increased use of AMAs. 

The commenter asserted AMAs, which 

are typically contracts for future 

delivery of cattle where the price paid 

at time of delivery is tied to a 

contemporaneous price such as that in 

the ‘‘spot’’ cash market for cattle, give 

packers ample opportunity to offload 

the risks of changes in the spot market 

onto producers by manipulating the 

prices they pay them at delivery. The 

commenter cited several ways in which 

the prevalence of AMAs shapes the 

market to packers’ advantage. According 

to the commenter, animals under AMAs 

contribute, along with those directly 

owned by packers, to a large ‘‘captive 

supply’’ of cattle for packers, which 

gives these regulated entities substantial 

control over the cash price of beef. In 

addition, the commenter said lack of 

participation in spot markets means 

they provide less reliable price signals 

for AMAs, allowing packers to easily 

conduct limited spot market sales at low 

prices, in turn lowering the prices they 

pay producers at time of delivery. 

The commenter argued that many of 

these packer practices relating to AMAs 

are deceptive because they can induce 

producers to enter into contracts in 

which they do not fully appreciate the 

extent to which packers control the 

applicable risks. At a minimum, the 

commenter urged AMS to clarify that 

the proposed rule’s ban on deceptive 

practices extends to packer 

manipulation of spot market prices to 

lower the price paid to independent 

producers at time of delivery. The 

commenter also stressed that it would 

prefer AMS to introduce a 

comprehensive prohibition of deceptive 

practices associated with AMAs to 

avoid placing the burden of identifying 

manipulation on individual producers. 

Specifically, the commenter 

recommended that AMS require forward 

livestock contracts to include a firm and 

predictable base price, so packers have 

no room to manipulate prices, citing the 

recent Cargill case under which DOJ 

alleged that contracts executed by major 

poultry processor defendants under the 

tournament system violated the Act. 

The final judgment agreed to by the 

parties and entered by the Court 

requires that the defendant processors 

pay contract poultry growers a firm and 

predictable base price.196 The 

commenter also suggested AMS 

consider banning packer-owned cattle 

as well as captive supply arrangements 

that use formula or basis price forward 

contracts. 

AMS Response: AMS is aware that 

concerns exist around forward cattle 

contracts and AMAs, especially those 

linked to thin cash markets. AMS is not 

addressing in this rulemaking whether 

AMAs are inherently deceptive. 

Therefore, AMS will not include a 

blanket prohibition on such contracting 

in this rule. 

Likewise, AMS has determined it will 

not add the commenter’s suggested ban 

on packer-owned cattle and captive 

supply arrangements that use formula or 

basis price forward contracts. AMS 

believes more analysis is needed to 

ensure such intervention is appropriate. 

Comment: An agricultural advocacy 

organization recommended that AMS 

add a provision to § 201.306 

establishing a standard for contract 

completeness and providing that use of 

contracts that do not meet these 

minimum standards constitutes an 

unlawful deceptive practice under the 

Act. The commenter argued this 

measure would help producers 

operating in monopolistic regional 

markets, saying integrators often take 

advantage of the lack of buyer-side 

competition by unilaterally dictating 

base prices, providing deceptive 

earnings claims, offering incomplete 

and one-sided contracts leaving out key 

terms such as the number of flocks a 

poultry grower can expect to receive, 

and coercing producers into taking on 

additional debt to upgrade their 

facilities. The commenter recommended 

that the proposed rule specify that 

complete contracts include the 

expectation that contracts clearly state a 

minimum price or rate of pay for 

products or services rendered; a detailed 

disclosure of potential expected capital 

investments necessary for a continued 

contractual relationship; and a 

minimum commitment of contract 

years, annual animal placements, and 

stocking density sufficient for the 

producer to maintain any contractually 

expected debt payments at the 

minimum guaranteed price or payment 

rate. The commenter also suggested 

AMS clarify that it would be unlawful 

retaliation for an integrator to coerce, 

intimidate, or break contract with a 

producer based on the producer’s 

unwillingness to implement integratordesired upgrades not previously 

detailed in a complete contract, as long 

as the producer’s infrastructure is 

legally compliant and in good working 

order. 

AMS Response: AMS understands 

that in highly concentrated buyer 

markets, producers may have limited 

control over contract terms due to the 

limited availability of buyers; however, 

AMS will not be establishing minimum 

standards for contract completeness via 

this rulemaking. This rule is intended to 

address broad areas of specific concern, 

not exhaustively identify all deceptive 

practices that could violate sec. 202(a) 

of the Act. Deceptive acts in contracting 

will be determined on a case-by-case 

basis based on the facts and 

circumstances of each individual case. 

Similarly, AMS will not be amending 

the regulations prohibiting retaliation 

(§ 201.304(b)) to implement the 

commenter’s specific circumstance 

regarding unwillingness to implement 

upgrades not previously detailed in a 

complete contract. This comment is 

outside the scope of this rulemaking and 

AMS is making no changes to the rule 

based on this comment. 

Comment: Agricultural advocacy 

organizations asked AMS to include a 

new paragraph enumerating a nonexhaustive list of prohibited conduct, 

saying this addition would clarify that 

the Act explicitly prohibits certain 

conduct known to harm producers and 

market integrity. The commenters 

further said AMS should include any 

other specific types of harmful conduct 

producers currently face and stress that 

all other conduct known to harm 

producers or market integrity is 

prohibited even if not directly listed. 

The commenters provided the following 


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Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 16159 

197The commenters noted that, if AMS adopts 

this addition, it must also revise § 201.306(a) to 

include paragraph (f): ‘‘A regulated entity may not 

engage in the specific deceptive practices 

prohibited in paragraphs (b) through (f) of this 

section.’’ 

198Agricultural Marketing Service, 

‘‘Transparency in Poultry Grower Contracting and 

Tournaments,’’ Proposed Rule (87 FR 34980, June 

8, 2022), available at https://

www.federalregister.gov/documents/2022/06/08/ 

2022-11997/transparency-in-poultry-growercontracting-and-tournaments. 

199Agricultural Marketing Service, ‘‘Poultry 

Growing Tournament Systems: Fairness and 

Related Concerns,’’ Request for Comments (87 FR 

34814, June 8, 2022), available at https://

www.federalregister.gov/documents/2022/06/08/ 

2022-11998/poultry-growing-tournament-systemsfairness-and-related-concerns. 

recommended regulatory text to 

incorporate these suggested changes: 

(f) Specific deceptive practices 

prohibited.197 In addition to any other 

conduct prohibited by subsections (b) 

through (e), a regulated entity may not engage 

in the following conduct during contract 

formation, performance, or termination or 

when refusing to contract: 

(1) Demanding capital investments as a 

condition of contract renewal if such capital 

investment demands were not previously 

agreed to in writing between the covered 

producer and regulated entity. 

(2) Demanding capital investments by a 

covered producer without commensurate and 

enforceable obligations on the part of the 

regulated entity that will reasonably allow 

the covered producer to recover the 

demanded capital costs plus a reasonable 

return. 

(3) Refusing to deal because the livestock 

producer is selling livestock on the cash 

market rather than through a contract 

arrangement and the livestock is otherwise 

marketable. 

(4) Failing to provide a guaranteed base 

pay in Alternative Marketing Agreements, 

production contracts, or other similar 

arrangements. 

(5) Inequitably distributing inputs such as 

animal placements, feed, veterinary care, or 

other inputs controlled by a regulated entity 

that can impact a covered producers’ 

performance or compensation. 

(6) Shifting environmental compliance 

costs or responsibilities exclusively to a 

covered producer when the regulated entity 

exercises substantial operational control, 

through contract or otherwise, over the 

producer through an ownership interest in 

the livestock or poultry, land or other capital, 

or control of a covered producers’ activities, 

inputs, management and waste management 

practices, or capital investments. 

AMS Response: AMS is making no 

changes to the rule based on this 

comment. The commenters’ proposed 

specific prohibitions are outside the 

scope of the deceptive practices AMS 

intended to address in this rule. 

Comment: Agricultural advocacy 

organizations suggested AMS look to the 

poultry transparency proposed rule 198

and the advance notice of proposed 

rulemaking regarding fairness and 

related concerns in poultry grower 

tournament systems,199 saying AMS 

should ensure that the deceptive 

practices identified in these 

rulemakings, such as unfounded claims 

about potential earnings made to 

prospective contract growers, lack of 

transparency in explaining tournament 

results, and inconsistent input quality, 

are also incorporated into this rule. 

AMS Response: AMS is making no 

changes to the rule based on this 

comment. This final rule seeks to 

provide a broad set of protections for all 

producers. Other rules that AMS may 

propose or finalize, including rules 

relating to poultry grower ranking 

systems, are separate and distinct. 

iv. Approach to Governance and 

Structuring of Deception and Employing 

False or Misleading Statements 

AMS requested comment on whether 

deception in contract refusal should be 

governed by the categorial approach as 

proposed, or whether it should be 

governed by a single statement setting 

out one standard for contract formation, 

performance, and termination. It also 

requested comment on whether it 

should structure deception around 

prohibiting the deceptive pretext, 

statement, or omission, rather than 

prohibiting the contractual activity 

based on the deceptive statement or 

omission as proposed. In addition, it 

requested comment on whether the 

prohibitions on ‘‘employing’’ certain 

false or misleading statements, pretexts, 

and omissions in the formation, 

operation, etc., of a contract 

appropriately capture the importance or 

effect of the misleading statement, such 

as its material or relevance to the 

producer or the formation, operation, 

etc., of the contract. Alternatively, it 

asked whether it should prohibit a 

regulated entity from employing any 

pretext, false or misleading statement, or 

omission of material facts necessary to 

make a statement not false or 

misleading, in connection with making, 

enforcing, or cancelling a contract. AMS 

also asked if there was a better way to 

approach the issue, such as using 

elements or defenses. 

Comment: An agricultural advocacy 

organization said the categorical 

approach to governance in the rule as 

proposed is appropriate because 

itemizing the likely deceptive actions 

more effectively draws attention to the 

various deceptive actions potentially 

used by regulated entities. This 

commenter indicated that either 

approach to structuring would be 

effective but said the structure as 

proposed would better make current 

producers and prospective aware of the 

types of potential deception they may 

encounter. It also indicated support for 

the approach to employing of false or 

misleading statements, pretexts, or 

omissions AMS took in the proposed 

rule. 

AMS Response: AMS takes note of the 

commenter’s support for the usefulness 

of the provisions. AMS made no 

changes to the rule in response to this 

comment; however, as discussed in 

Section V—Changes from the Proposed 

Rule, AMS made several changes to the 

verbiage of § 201.306(b) through (d), 

including removing the word ‘‘pretext’’ 

and replacing the phrase ‘‘omission of 

material fact’’ with ‘‘omission of 

material information.’’ 

v. Other Elements To Explicitly 

Consider in Rule on Deception 

AMS requested comment on whether 

there are other elements, such as the 

reasonableness of the recipient, that it 

should explicitly consider in a rule on 

deception. 

Comment: An agricultural advocacy 

organization said AMS should consider 

whether the contract language was clear 

and written in a language the producer 

understands when evaluating if a 

regulated entity used deceptive 

practices. The commenter also said the 

proposed rule on transparency in 

tournament systems addressed 

disclosure-related issues that AMS 

should consider in establishing when 

contract terms should be considered 

deceptive. 

AMS Response: Whether the contract 

language was clear and written in a 

language the producer understands 

would be part of any evaluation to 

determine whether a statement 

(including any omission of material 

information) was false or misleading 

and that determination would be 

dependent on the particular facts and 

circumstances of the contract. This rule 

is intended to cover not only the poultry 

industry, but the swine and cattle 

industries. As such, it focuses on 

general circumstances that may give rise 

to the provision of false or misleading 

information. Therefore, AMS is making 

no changes to the rule based on this 

comment. 

vi. Specific Challenges or Burdens 

Regulated Entities Might Face in 

Complying With Deceptive Practices 

Provisions of Proposed Rule 

AMS requested comment on specific 

challenges or burdens regulated entities 

might face in complying with the 

deceptive practices provisions of the 


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proposed rule and how they differ from 

existing policies, procedures, and 

practices of regulated entities. 

Comment: A poultry industry trade 

association and several live poultry 

dealers said the deceptive practices 

provisions of the proposed rule would 

discourage legitimate adverse actions by 

companies, making the system less 

efficient overall. First, the commenters 

said AMS does not provide guidance on 

how it defines ‘‘pretext’’ or how a 

regulated entity would demonstrate that 

an explanation is not pretextual, which 

raises uncertainties in terms of 

compliance and may dissuade 

companies from providing detailed 

explanations to producers to avoid the 

potential for second-guessing on motive. 

The commenters also said the proposed 

rule is unclear about whether regulated 

entities seeking to avoid a potential 

omission of material fact need to 

mention every business reason that 

contributed to a decision even if other 

factors were more relevant. In addition, 

the commenters said the proposed 

deception provision makes it more 

challenging to terminate relationships 

with contractors who perform poorly or 

mistreat animals, giving regulated 

entities incentive to keep these contracts 

in place rather than risk lawsuits over 

whether any communications leading 

up to the termination were deceptive 

and resulted in fewer opportunities for 

new entrants to the poultry industry. 

A swine industry trade association 

said the deceptive practices provisions 

would likely lead to costly litigation 

because the rule is overly broad and 

vague in its description of prohibited 

conduct. For example, according to the 

commenter, the proposed rule does not 

provide any definition or guidance on 

what constitutes a ‘‘material’’ fact, 

which is deceptive if omitted, and its 

ban on deceptive practices with respect 

to ‘‘any matter’’ related to livestock, 

meats, or live poultry does not clearly 

establish the scope of conduct at issue. 

In addition, the commenter said much 

of § 201.306 is unnecessary because 

other laws already sufficiently restrict 

the conduct at issue. 

AMS Response: Section 201.306 is 

designed to address deceptive practices 

in the marketplace by establishing four 

categories in the contracting process 

where deceptive practices commonly 

occur. The aim is to promote a 

marketplace that is free from the type of 

injury the Act was designed to prevent. 

Such a framework is necessarily broad, 

as the commenters noted, however, this 

framework is not intended to, and 

should not, cripple regulated entities’ 

decision-making or the system overall. 

AMS must help ensure that regulated 

entities are truthful in their dealings 

with producers. Under these rules, AMS 

would seek to uncover the real motive 

for a regulated entity’s treatment of a 

producer with whom they are forming 

or have a contractual relationship. AMS 

is including a prohibition against false 

or misleading statements, or omission of 

material information necessary to make 

a statement not false or misleading (in 

paragraphs (b) through (d)) to protect 

producers from conduct that employs 

deceit to disguise a regulated entity’s 

genuine motive. Over the years, 

producers have reported concerns 

regarding their inability to understand 

and appreciate the real reasons why 

regulated entities take certain actions 

against them, in particular with respect 

to certain actions such as reduced chick 

placement or contract termination. For 

example, producers have asserted that 

sometimes a regulated entity will 

suddenly enforce certain parts of a 

contract in a stricter manner—such as 

animal welfare guidelines—even though 

the regulated entity had earlier found 

the producer’s conduct under the 

contract acceptable. Producers assert 

that this is an example of a form of 

retaliation for actions by the producer or 

a deceptive practice to accommodate 

unrelated economic decision-making. 

Producers need to understand the real 

reasons for regulated entities’ decisionmaking both to protect themselves from 

specific inappropriate adverse actions 

(such as undue prejudice or retaliation) 

and to be able to compete more 

effectively in a concentrated 

marketplace. If they cannot learn the 

real reasons why certain actions are 

taken against them, they cannot plan or 

mitigate the risks they may face. 

Therefore, AMS believes it is crucial to 

establish a regulatory framework 

prohibiting deceptive practices in 

contracting. AMS believes such a 

framework should provide broad, nonexhaustive prohibitions to provide 

better coverage for producers against 

deceptive practices in various stages of 

the contracting process. AMS may refine 

this framework via future rulemakings if 

the need arises. 

With respect to the commenters’ view 

that AMS does not provide guidance on 

how it defines ‘‘pretext’’ or how a 

regulated entity would demonstrate that 

an explanation is not pretextual, AMS 

adopted clarifying language by 

withdrawing its use of ‘‘pretext’’ and 

relying on the prohibition against 

employing a ‘‘false or misleading 

statement.’’ 

With respect to the commenters’ 

critiques regarding the materiality 

standard, under the FTC’s Policy 

Statement on Deception, ‘‘material’’ 

refers to information that would affect a 

consumer’s—in this case, producer’s— 

conduct or decision-making, from the 

perspective of a producer acting 

reasonably under the circumstances. Act 

precedent may not require AMS to 

follow FTC’s precedent in all 

circumstances, but AMS has designed 

the rule to satisfy the approach set forth 

in the FTC Policy Statement on 

Deception in this set of deceptive 

practice prohibitions. AMS is not 

seeking to establish a ‘‘but for’’ 

standard; however, the materiality of the 

information is already embedded in the 

regulated entity’s act of ‘‘employing’’ 

the omission on which the covered 

producer has relied on in the 

contracting activity under § 201.306. 

Commenters also expressed concern 

about § 201.306’s prohibition against the 

omission of material facts, questioning 

whether compliance would require that 

regulated entities mention every 

business reason that contributed to a 

decision even if other factors were more 

relevant. AMS notes that proposed 

§ 201.306(b) through (d) specified that 

the prohibition applies to the ‘‘omission 

of material fact necessary to make a 

statement not false or misleading.’’ If 

one of the factors that contributed to a 

regulated entity’s business decision was 

not material or relevant, then the 

omission of that information would be 

unlikely to make a statement false or 

misleading from the perspective of a 

producer acting reasonably under the 

circumstances. AMS therefore made no 

changes to the proposed regulations in 

response to this comment; however, 

AMS notes that as discussed in Section 

V—Changes from the Proposed Rule, 

AMS made several changes to the 

verbiage of § 201.306(b) through (d), 

including replacing the phrase 

‘‘omission of material fact’’ with 

‘‘omission of material information.’’ 

In response to commenters’ concerns 

regarding the potential for increased 

litigation, AMS acknowledges that the 

provisions of § 201.306 could result in 

additional litigation because the 

regulations could provide producers 

new hope for relief from deceptive 

conduct in the contracting process. 

However, as discussed in more detail in 

this rule’s Regulatory Impact Analysis 

in Section VIII.B., AMS does not expect 

large increases or decreases in litigation 

from this rule. Though commenters 

expressed concern that this regulation 

will lead to costly litigation because it 

is too broad and vague, AMS notes that 

in this final rule the Agency has 

provided additional clarity on the 

meaning of ‘‘material’’ in these 


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200Swift & Co. v. United States, 393 F.2d 247, 253 

(7th Cir. 1968). 

regulations and removed use of the 

word pretext. AMS also rejects the 

commenter’s assertion that the rule is 

overly broad and vague in its ban on 

deceptive practices with respect to ‘‘any 

matter’’ related to livestock, meats, or 

live poultry because this assertion is 

inaccurate. This regulation does not ban 

any deceptive practice related livestock, 

meats, or live poultry: paragraph (a) 

establishes that the scope of § 201.306 is 

prohibiting deceptive practices that 

occur in specific stages of the 

contracting process. These stages are 

then delineated in paragraphs (b) 

through (e). AMS notes, however, that it 

has removed the words ‘‘any matter’’ 

from § 201.306(a). 

With respect to the commenter’s view 

that § 201.306 is unnecessary, AMS 

disagrees. AMS believes that, while 

USDA regulations prohibiting specific 

deceptive practices already exist, a 

regulatory framework prohibiting 

deception during the contracting 

process is necessary because this will 

provide much-needed certainty and 

predictability to the interpretation of 

this section of the Act. 

vii. Specific Recordkeeping Provisions 

Relating to Deceptive Practices 

AMS requested comment on whether 

it should propose specific 

recordkeeping provisions relating to 

deceptive practices and what such 

practices should include. 

Comment: An agricultural advocacy 

organization recommended that AMS 

introduce a recordkeeping requirement 

related to deceptive practices to help it 

enforce these practices. Another 

agricultural advocacy organization 

suggested AMS require regulated 

entities to provide examples of contract 

terms as well as procedures related to 

tournament settlements and input 

quality, saying this requirement would 

help it identify deceptive practices. 

AMS Response: In response to 

commenters’ suggestions, AMS notes 

that regulated entities are already 

required to maintain records pertaining 

to their business activities (see 9 CFR 

201.95). In light of existing law, a 

specific recordkeeping requirement 

covering every statement or interaction 

that could amount to deception is not 

appropriate as it could be expensive and 

burdensome, while yielding little 

benefit in terms of usable, searchable 

information. AMS will monitor 

regulated entities’ practices to evaluate 

whether additional requirements are 

necessary. AMS further notes that 

should specific problems emerge, 

heightened recordkeeping could be a 

requirement arising out of enforcement 

actions or adopted in future rulemaking. 

AMS is not adopting the commenter’s 

suggestion regarding examples of 

contract terms and procedures related to 

tournament settlements and input 

quality because they are outside the 

scope of this rule. AMS made no further 

changes in response to the comments. 

viii. Requirement That All Contracts be 

in Writing 

AMS requested comment on whether 

all contracts with respect to livestock, 

meats, meat food products, livestock 

products in unmanufactured form, or 

live poultry should be in writing. 

Comment: Agricultural advocacy 

organizations said AMS should require 

all contracts to be in writing because 

doing so is necessary for enforcing the 

Act. These commenters said AMS 

should also require regulated entities to 

make all claims to prospective 

producers in writing to deter false or 

misleading statements designed to 

encourage signing of a contract. 

A plant worker indicated support for 

requiring all contracts to be in writing, 

while noting that some benefits would 

be limited. According to the commenter, 

introducing this type of requirement 

would help producers by providing a 

record of the transaction and an increase 

in transparency. However, the 

commenter also said such a requirement 

would be less likely to address packer 

pressure on producers to use formula 

market arrangements to incentivize 

cattle quality if the packers present 

these arrangements as take-it-or-leave-it 

offers, although it would at least help 

create an environment that is 

transparent about material terms. The 

commenter also said that many 

jurisdictions may already require 

contracts to be in writing to satisfy the 

statute of frauds, especially if they cover 

multiple years, thus making a provision 

requiring written contracts potentially 

redundant in some cases. 

AMS Response: AMS appreciates the 

commenters’ views on the value of 

written contracts and agrees that written 

contracts have significant benefits for 

reducing deceptive practices and 

encouraging market integrity. Written 

contracts provide both parties clearer 

understanding of their positions and the 

opportunity for regulators to review and 

evaluate the functioning of the market. 

However, AMS also recognizes that it is 

a longstanding trade practice in the 

agricultural sector for many parties to 

negotiate and assent to contract terms 

orally, which holds the same weight 

under the law as a written contract. 

USDA has pursued many cases based on 

the violation of unwritten terms, and 

this will not change. Requiring that all 

contracts be in writing would more 

significantly affect cattle markets, as 

more of those markets remain cashnegotiated. Contract formation regarding 

the purchase and sale of livestock often 

occurs over the phone and quickly. 

Requiring written contracts would 

impede the ability of parties to conduct 

business expeditiously, which is often 

necessary in fluctuating commodity 

markets, especially for perishable 

products like meat. Vertically integrated 

contract growing arrangements, which 

are nearly universal in poultry and 

widespread in hogs, are more 

characterized by written contracts 

already. In this rule, AMS is choosing 

not to adopt a requirement for written 

contracts or claims in all circumstances. 

While AMS believes that written 

contracts are a good practice, especially 

in light of changes in technology (like 

email and electronic signatures), AMS 

believes additional study and 

consideration is needed and is deferring 

for future consideration whether a 

mandate is appropriate. 

ix. Treatment of Failure To Continue To 

Buy in Cash Market Following Regular 

Pattern or Practice of Such Buying 

AMS requested comment on whether 

a failure to continue to buy in the cash 

market, following a regular or 

dependable pattern or practice of such 

buying, should be treated for the 

purposes of this proposed rule as more 

similar to termination of a contract, 

rather than as refusal to deal. 

Comment: An agricultural advocacy 

organization said it agreed with AMS 

that a decision or action on the part of 

a regulated entity to stop buying on the 

cash market is more analogous to a 

contract termination than a refusal to 

deal but notes that these decisions or 

actions also share key features with the 

latter. The commenter provided the 

example of a packer who refuses to buy 

cattle in the cash market from a covered 

producer who regularly sells on the cash 

market unless the producer agrees to 

enter a forward contract with a packer; 

this act would constitute both refusal to 

deal and termination of a contract, and 

would also be a form of prohibited 

retaliation. 

AMS Response: AMS agrees that a 

circumstance where a packer refuses to 

buy cattle in the cash market from a 

covered producer who regularly sells on 

the cash market to the regulated entity 

is analogous to a contract termination, 

as past court decisions have recognized 

a remedial duty under the Act to a make 

purchases in certain circumstances.200


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201Total meat and poultry processing industry 

revenues. Source: https://www.ibisworld.com/ 

industry-statistics/market-size/meat-beef-poultryprocessing-united-states/#:∼:text=The%20market

%20size%2C%20measured%20by,industry

%20increased%200.2%25%20in%202022. 

AMS did not make any revisions to 

§ 201.306 in response to this comment; 

however, AMS is clarifying in 

§ 201.304(b)(3)(iv) of this final rule that 

refusing to deal with a covered producer 

refers to refusing to deal on terms 

generally or ordinarily offered to 

similarly situated covered producers, 

which would include the producer’s 

prior status quo. This would address the 

case where a producer has a prior track 

record of regular sales to the packer but 

is cut off. AMS also added 

§ 201.304(b)(3)(vi) to further clarify that 

harm to a producer on the basis of 

protected activities is intended broadly 

to capture materially adverse retaliatory 

action that a packer may take against a 

producer. 

H. Severability (§ 201.390) 

AMS proposed adding a new 

provision to 9 CFR part 201 of the 

Packers and Stockyards regulations 

ensuring that if any provision—or 

applicability of any provision—of 

subpart O was declared invalid, the 

validity of the other provisions of 

subpart O would be unaffected. AMS 

noted this is to provide a reviewing 

court some guidance on the Agency’s 

position on how the rule is intended to 

function. 

Comment: An agricultural advocacy 

organization indicated support for the 

severability provision, saying that, in 

the event of successful court challenges 

to specific provisions of the proposed 

rule, it would help ensure that the 

protections in the rest of the rule 

remain. 

AMS Response: AMS agrees that a 

severability clause is appropriate 

because the undue prejudice, 

retaliation, and deception sections of 

this rule can be enforced as stand-alone 

provisions. They are not 

interdependent, therefore the exclusion 

of one does not disqualify any of the 

others. For this reason, as discussed in 

more detail in Section VI.F—Provisions 

of the Final Rule, Severability, AMS has 

included under § 201.390 a severability 

clause in its final rule. 

I. Effective and Compliance Dates 

Comment: An industry company said 

AMS should consider what amount of 

time is necessary to implement changes 

resulting from its new rules, and 

recommended it provide one effective 

date for all regulatory changes required 

by updates to the Act. 

AMS Response: AMS agrees with 

commenters that the final rule should 

provide a clear effective date for 

implementation. The AMS Act final rule 

‘‘Undue and Unreasonable Preferences 

and Advantages Under the Packers and 

Stockyards Act’’ was published on 

December 11, 2020, and became 

effective on January 11, 2021, providing 

a 30-day period. AMS believes that this 

rule presents a similar scope of 

rulemaking coverage, relating to basic 

principles that regulated entities 

themselves have acknowledged they 

already comply with. However, in 

response to requests from commenters 

for additional time, AMS will give 60 

days, which the Agency feels provides 

adequate time for regulated entities to 

become compliant with this rule given 

the low cost and minimal process 

changes required to do so. Accordingly, 

within 60 days of publication in the 

Federal Register, regulated entities are 

expected to comply with all 

components of new subpart O. 

J. Regulatory Notices & Analysis & 

Executive Order Determinations 

i. Costs and Benefits of Proposed Rule 

Pursuant to the requirements of 

Executive Order 12866, AMS conducted 

a cost-benefit analysis of the proposed 

rulemaking by considering three 

regulatory alternatives: (1) maintaining 

the status quo and not implementing the 

proposed rulemaking, (2) issuing the 

proposed rulemaking, or (3) issuing the 

proposed rulemaking but exempting 

small businesses from compliance with 

the recordkeeping requirement. 

a. Costs of Proposed Rule 

Comment: Several live poultry dealers 

and trade associations took issue with 

the accuracy of cost estimates in the 

proposed rulemaking. A poultry 

industry trade association and several 

live poultry dealers contended that the 

Agency’s first-year estimate of $504 per 

live poultry dealer to comply with the 

proposed rule is a drastic 

underestimate. They argued that the 

costs of physical filing cabinets to 

maintain the requisite paperwork alone 

would exceed the estimated first-year 

cost, and that recordkeeping and 

computer systems to digitally maintain 

records would be more costly. The 

commenters also contended that the 

AMS cost estimates overlooked 

significant labor costs that would be 

required to comply with the new rules, 

including legal services. 

AMS Response: AMS disagrees with 

commenters’ assertions regarding the 

accuracy of its cost estimates. AMS 

subject matter experts calculated the 

estimated compliance and 

recordkeeping costs associated with this 

rule. These experts are economists and 

supervisors in AMS’s PSD with many 

years of experience conducting 

investigations and compliance reviews. 

AMS stands behind their estimates. 

AMS believes that the costs associated 

with this rule will be minimal: the firstyear total cost is estimated to be 

$586,000, or 0.0002 percent of revenues, 

given that total sales of beef, pork, and 

broiler chicken was approximately 

$294.5 billion in 2022.201 This figure 

encompasses an estimate of the total 

value of the time required to review and 

learn the rule, review live poultry 

dealers’ and packers’ procurement 

policies and production contracts, make 

any necessary changes to ensure 

compliance with the new regulations, 

and maintain records to demonstrate 

compliance practices. AMS estimates 

that the total cost for each succeeding 

year would be $298,000, or 0.0001 

percent of revenues. 

With respect to commenters’ assertion 

that AMS has neglected to account for 

labor costs, including legal services, 

AMS notes that in the proposed rule’s 

Paperwork Reduction Act analysis, 

AMS provided a compliance cost 

breakdown for the hours required of 

attorneys, as well as administrative 

assistants, managers, and information 

technology staff. AMS does not expect 

large increases or decreases in litigation 

costs, and thus regulated entity legal 

services. The clarity provided by the 

rule encourages regulated entities to 

proactively avoid prejudicial, 

discriminatory, and deceptive practices 

that could otherwise lead to costly 

litigation. Likewise, the rule could also 

provide producers hope for relief from 

the courts for perceived prejudicial, 

discriminatory, and deceptive practices, 

which could, in turn, increase litigation 

but would return benefits to producers 

in reduced harms. In response to 

commenters’ concerns regarding the 

costliness of the rule’s recordkeeping 

requirements, AMS argues that the 

recordkeeping requirements were 

crafted to provide flexibility for 

regulated entities. The rule does not 

prescribe the manner in which records 

must be stored. If a regulated entity 

finds the cost of filing cabinets 

prohibitive, the entity may choose 

whichever means of file retention is 

most cost effective, including currently 

available computer filing systems, 

which most companies maintain in the 

normal course of business. Additionally, 

the rule provides regulated entities 

leeway to determine which records they 

choose to maintain. Because this rule 

applies to regulated entities across a 


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Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 16163 

202Org. for Competitive Mkts. v. Dep’t of 

Agriculture, 912 F.3d 455, 459 (8th Cir. 2018) 

(quoting 82 FR 48594, 48597 (Oct. 18, 2018)). 

203Scope of §§ 202(a) and (b) of the Packers and 

Stockyards Act, 81 FR 92566, 92576, December 20, 

2016 (discussing cost estimates prepared by 

Thomas Elam and Informa Economics). 

variety of industries and of varying 

sizes, AMS did not prescribe a set of 

records each entity must retain, 

regardless of their relevance to a 

particular entity’s circumstances. Some 

firms might not have any records to 

store. Others may already store relevant 

records and may have no new costs. 

Therefore, the rule saves regulated 

entities from the burden of maintaining 

records irrelevant to their 

circumstances. 

Accordingly, AMS makes no changes 

to the rule in response to these 

comments. 

Comment: Many industry companies 

and trade associations argued that the 

cost estimates put forward in the 

proposed rule ignore significant 

litigation costs that would be inevitable 

under the proposed regulations. A cattle 

industry trade association disagreed 

with AMS’s cost analysis that the rule 

could plausibly reduce litigation costs 

‘‘if companies come into compliance 

without any enforcement action.’’ The 

trade association argued that the rule 

contains vague standards and eliminates 

the requirement that a plaintiff must 

show competitive harm, both of which 

would lead to a proliferation of 

litigation. It asserted that the threat of 

litigation would cause packers to reduce 

their legal risk exposure by 

standardizing their contracts with 

producers, which could be costly for 

producers who benefit from contracts 

tailored to their individual needs or 

conditions (e.g., cattle weight targets 

based on geographic location and 

regional feedstuffs availability). Finally, 

it noted that AMS itself acknowledged 

that GIPSA declined finalizing the 

agency’s proposed rule in 2016—the 

Farmer Fair Practices Rule—because it 

contained ambiguous terms that would 

increase litigation between regulated 

entities and producers. 

A live poultry dealer echoed this 

concern, citing USDA’s 

acknowledgement in the previously 

proposed 2016 Farmer Fair Practice 

Rule that rolling back the harm to 

competition requirement would 

‘‘inevitably lead to more litigation in the 

livestock and poultry industries.’’ 202

The dealer also said that if the proposed 

rule is implemented, the company 

would no longer have incentive to 

contract with individuals due to 

litigation risk and would need to rely 

more heavily on company-owned farms 

to raise its poultry. It argued that the 

result would be decreased grower 

competition and thus decreased grower 

pay, resulting in another unmeasured 

cost of the proposed rule. 

An industry trade association 

suggested that millions of dollars per 

year would be required to litigate, 

define, and refine the terms of the new 

rule due to ambiguity. It said that 

frivolous litigation that misunderstands 

or capitalizes on vagueness in the rule 

would add significant litigation costs. 

The trade association estimated the cost 

of compliance with the new rule 

(including anticipated litigation) to be 

more than $100 million to the industry. 

It cited independent economic analyses 

of previous AMS rulemakings on similar 

topics that estimated economic impact 

costs exceeding $1 billion,203 arguing 

that AMS significantly underestimates 

cost estimates in the new proposed rule. 

AMS Response: Litigation is possible 

following the passage of any rule. The 

threat of such litigation does not 

preclude AMS from fulfilling its 

mandate to administer the Act. AMS 

believes that discriminatory, retaliatory, 

and deceptive practices only serve to 

exclude qualified producers from the 

market. Even if such conduct impacts a 

single producer, it can reasonably be 

inferred that, if unchecked, such 

conduct will proliferate and negatively 

impact other producers and the market. 

Therefore, it is the opinion of the 

Agency that such conduct must be 

stopped in its incipiency, or it will 

likely cause widespread harm. 

In response to commenters’ complaint 

that AMS has overlooked significant 

litigation costs that would be inevitable 

under the proposed regulations, AMS 

does not expect large increases or 

decreases in litigation costs. The clarity 

provided by the rule encourages 

regulated entities to proactively avoid 

prejudicial, discriminatory, and 

deceptive practices that could otherwise 

lead to costly litigation. This effect 

would lead to a decrease in litigation 

costs. Likewise, the rule could also 

provide producers hope for relief from 

the courts for perceived prejudicial, 

discriminatory, and deceptive practices, 

which could, in turn, increase litigation 

costs but would return benefits to 

producers in reduced harms. AMS is 

uncertain as to which effect will 

dominate and to what extent and, 

therefore, does not estimate litigation 

costs in this analysis. 

With respect to the comments 

regarding compliance costs for the 2016 

Farmer Fair Practice Rule, commentors 

discussed that a trade association 

estimated the cost of compliance with 

rule (including anticipated litigation) to 

be more than $100 million to the 

industry. A commentor also noted that 

an independent economic analyses of 

previous AMS rulemakings on similar 

topics that estimated economic impact 

costs exceeding $1 billion. The 2016 

Farmer Fair Practice Rule was a very 

different proposed rule with a much 

wider scope than this final rule, and 

AMS does not consider a comparison of 

the 2016 Farmer Fair Practice Rule and 

this final rule to be an accurate 

comparison. The costs of this final rule 

are much smaller than the estimated 

costs of the 2016 Farmer Fair Practice 

Rule. GIPSA estimates the average 

litigation cost of the 2016 Farmer Fair 

Practice Rule to be less than $9 million 

in the first year. Given the scope of this 

final rule is smaller than the 2016 

Farmer Fair Practice Rule, AMS expects 

litigation to be smaller. This, combined 

with the offsetting effects of the 

increases and decreases in litigation, 

leads AMS to not consider adding 

litigation costs to the rule. 

The assertion that packers will be 

forced to standardize all contracts to 

ensure conformity with the rule is 

without basis. Standardizing contracts 

may be one way to ensure fair treatment 

of producers, however, this rule in no 

way mandates such a response from 

packers. Similarly, AMS disagrees with 

the assertion that fear of litigation 

would remove any incentive to contract 

with individual poultry growers. The 

aim of the rule is to discourage abuses 

of power in the marketplace to allow 

qualified producers to participate freely 

in the market and receive full value for 

their efforts. Reliance on individuals to 

raise poultry evolved as an 

economically advantageous way for 

integrators to bring poultry to the 

market. AMS does not believe that a 

greater focus on ensuring honest dealing 

and honest decision-making is 

incompatible with this model. Further, 

AMS disagrees with the assumption that 

a regulated entity would need to abstain 

from contracting with individuals to 

ensure that they are not abusing their 

market power by operating in 

prejudicial, retaliatory, or deceptive 

ways. 

With respect to the comments 

regarding rules previously published by 

GIPSA, AMS notes that GIPSA’s 

withdrawal of its 2016 rules was 

justified in part due to the rules’ lack of 

clarity regarding prohibited behavior 

and the agency’s perception that such 

ambiguity would increase litigation 

costs. This rule differs from the GIPSA 

rules by more clearly and specifically 

laying out the types of conduct that will 


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16164 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

204See House Chair David Scott D–GA, Opening 

remarks, U.S. House, Committee on Agriculture, 

‘‘An Examination of Price Discrepancies, 

Transparency, and Alleged Unfair Practices in 

Cattle Markets,’’ April 27, 2022, (14 min: 24 sec), 

available at https://anchor.fm/houseagdems/ 

episodes/An-Examination-of-Price-Discrepancies-- 

Transparency--and-Alleged-Unfair-Practices-inCattle-Markets-e1hpvo8/a-a7r40dk. See also U.S. 

Senate Committee on Agriculture, Nutrition, and 

Forestry, ‘‘Legislative hearing to review S. 4030, the 

Cattle Price Discovery and Transparency Act of 

2022, and S. 3870, the Meat and Poultry Special 

Investigator Act of 2022,’’ April 26, 2022, (1 hour 

39 min), available at https://

www.agriculture.senate.gov/hearings/legislativehearing-to-review-s-4030-the-cattle-price-discoveryand-transparency-act-of-2022-and-s3870-the-meatand-poultry-special-investigator-act-of-2022 

(Described fear of retaliation in livestock and 

poultry markets). 

be prohibited. Additionally, much has 

changed since the withdrawal of 

GIPSA’s 2016 rules. In 2017, GIPSA 

merged with AMS. AMS now 

administers regulations under the Act 

and undertook this rulemaking to meet 

its statutory mandate. Also, in the years 

since the GIPSA rules were withdrawn, 

USDA has continued to receive 

complaints from producers regarding 

undue prejudice and unfair, unjustly 

discriminatory, and deceptive practices. 

When Congress, in April 2022, held 

hearings to discuss such concerns 

regarding the cattle and poultry markets, 

the hearings were marked by the 

absence of producers who chose to 

avoid public testimony for fear of 

retribution.204 Meanwhile, the market 

remains highly concentrated and 

vertically integrated, which enables 

market power abuses and unjust 

distortions of the competitive landscape 

and makes any harms from them more 

significant. Smaller producers are 

unable to freely compete and receive 

fair value for their goods because in 

highly concentrated markets they often 

have no option but to do business with 

regulated entities which, in AMS’s 

experience, have caused producers to 

experience unjust and adverse 

treatment. AMS has not been able to 

effectively address these complaints, 

partly because of the lack of clarity 

regarding its regulations under the Act 

and the ability for individuals to bring 

cases based on specific instances of 

harm. Therefore, it is now the Agency’s 

belief that the potential costs of 

increased litigation are outweighed by 

the benefits to the market as a whole. 

With respect to the ‘‘vague standards’’ 

giving rise to increased litigation 

specifically, AMS has taken note and 

addressed clarity in this rule. 

Further, AMS will review the facts 

and circumstances of each case and the 

regulated entity’s justifications for any 

alleged adverse treatment to determine 

whether the regulated entity has 

violated this rule. AMS is making no 

changes to the rule in response to these 

comments. 

Comment: A plant worker argued 

that—given the modest cost estimates 

AMS provided for regulated entities to 

administratively comply with the 

recordkeeping requirements ($231–$485 

for first-year costs and less in 

succeeding years) of proposed 

§ 201.304(c)—consideration of the third 

regulatory alternative put forth by AMS 

was unnecessary. The commenter 

reasoned that because over 95 percent of 

packers reporting to AMS are small 

businesses, exempting such a large part 

of the industry would not be conducive 

to creating a uniform standard of 

recordkeeping and reducing deceptive 

practices across the industry. 

AMS Response: AMS agrees with the 

commenter that the third regulatory 

alternative was not the best option. 

AMS opted to proceed under regulatory 

alternative two, the proposed 

alternative. AMS chose to publish its 

legal and economic analysis regarding 

the third alternative to provide better 

transparency to the public regarding the 

Agency’s decision-making process. AMS 

is making no changes to the rule in 

response to this comment. 

AMS chose final §§ 201.304 and 

201.306 over the Small Business 

Exemption Alternative because AMS 

wishes to prevent the kind of undue 

prejudices and unjust discrimination 

described in the rule. AMS believes that 

keeping relevant records will help 

promote compliance with this rule, that 

all packers, live poultry dealers, and 

swine contractors cannot purchase 

livestock or enter into contracts for 

growing services with the kind of undue 

prejudices and unjust discrimination 

described in the rule. All packers, live 

poultry dealers, and swine contractors 

cannot purchase livestock or enter into 

contracts for growing services with the 

kind of undue prejudices and unjust 

discrimination described in the rule. 

b. Other Comments on the Cost-Benefit 

Analysis 

Comment: An agricultural advocacy 

organization contended that AMS 

should clarify the role of litigation costs 

in its cost-benefit analysis. It argued that 

litigation resulting from proposed 

rulemaking should not be treated purely 

as a cost, since (1) changes in behavior 

by regulated entities to reduce 

violations of the Act and (2) 

compensatory awards to market 

participants that suffer from violations 

of the Act both result in benefits that 

AMS should weigh in calculating the 

net costs of the proposed regulation. 

The association said that the Act relies 

in part on private litigation to keep 

livestock markets competitive, and 

while AMS is right to be cognizant of 

litigation costs by providing clear and 

unambiguous language to forestall 

unnecessary legal proceedings, litigation 

in general should not be treated solely 

as an ancillary cost without considering 

the benefits it confers. 

AMS Response: AMS is making no 

changes to the rule in response to this 

comment. Rulemaking procedure 

regarding the calculation of costs and 

benefits requires the inclusion of 

specific costs. The benefits of litigation 

are harder to quantify, and thus were 

not specifically included in the 

proposed rule. However, AMS agrees 

with commenter that there are benefits 

of litigation in that producers will be 

better able to protect themselves from 

undue prejudice, retaliation, and 

deception, and thus that litigation does 

not result solely in negative costs. By 

adding private rights of action to the Act 

as recently as 1987, Congress has 

expressly recognized that private 

litigation, or the threat thereof, is a force 

that shapes conduct for the protection of 

producers. To the extent that the threat 

of private litigation pressures regulated 

entities into compliance and keeps their 

conduct fair, litigation risks can serve to 

ensure this rule’s full potential is 

realized. 

K. Comments on Legal Authority or 

Other Legal Issues 

i. Statutory Authority Under the Act 

Comment: Several live poultry 

dealers, an industry company, industry 

associations, a legal foundation, and an 

individual argued the proposed rule 

exceeds AMS’s authority because it 

unlawfully seeks to transform the Act 

from an antitrust statute into a civil 

rights law despite Congress’s clear 

intention to address the type of harm to 

producers covered by the proposed rule 

via other statutory schemes rather than 

under the auspices of the Act. They 

argued that, if these laws still do not 

cover certain types of mistreatment 

producers may face, the correct course 

of action is for Congress to revise these 

statutes or pass new ones, not for AMS 

to attempt to address them via the Act. 

For example, a cattle industry trade 

association noted that 42 U.S.C. 1981 

already prohibits racial discrimination 

in private contracting in cases where the 

contractor cannot show harm to 

competition. The cattle industry trade 

association contended that, because 

Congress has never sought to expand the 

protections of section 1981 to other 

protected categories, AMS lacks 

authority to use the Act to effectively do 


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Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 16165 

205H.R. Rep. 67–77, at 2 (1921); see also Swift & 

Co. v. United States, 308 F.2d 849, 853 (7th Cir. 

1962) (‘‘The legislative history showed Congress 

understood the sections of the [P&S Act] under 

consideration were broader in scope than 

antecedent legislation such as the Sherman 

Antitrust Act, sec. 2 of the Clayton Act, 15 U.S.C. 

13, sec. 5 of the Federal Trade Commission Act, 15 

U.S.C. 45 and sec. 3 of the Interstate Commerce Act, 

49 U.S.C. 3.’’). 206 140 S. Ct. 1731, 1741 (2020). 

so in the absence of enabling legislation. 

This commenter also noted that 

multiple other USDA statutes explicitly 

refer to socially disadvantaged groups 

and socially disadvantaged farmers or 

ranchers, saying the lack of such 

references in the Act itself indicates that 

Congress did not intend for issues 

relating to exclusion or disadvantage of 

covered producers to fall within its 

scope. A swine industry trade 

association said proposed § 201.304(a) 

of the proposed rule covers conduct 

already prohibited by the Act itself as 

well as by other antitrust and antidiscrimination laws, such as the Civil 

Rights Act of 1964, the Agricultural Fair 

Practices act, and the Robinson-Patman 

Act. Industry trade associations and 

companies said other statutes such as 

the Agricultural Fair Practices Act, the 

Capper-Volstead Act, and laws 

protecting farmers from retaliation if 

they act as witnesses in a Federal 

investigation already prohibit retaliation 

against essentially all covered activities 

under proposed § 201.304(b). 

AMS Response: Consistent with the 

Act, this rule protects inclusive 

competition and market integrity, and is 

designed to ensure that fair and 

competitive conditions prevail in 

livestock and poultry markets. While 

this rule may in some ways resemble 

certain civil rights laws, it is distinct as 

it draws its authority from the Act, 

which sets forth a general prohibition 

on unjust discrimination and undue 

prejudice that is broader than civil 

rights statutes that focus solely on 

discrimination on account of a protected 

status. AMS believes that discrimination 

on the basis of an individual’s 

characteristics—in particular, the bases 

(as set forth in § 201.304(a)) of race, 

color, religion, national origin, sex 

(including sexual orientation and 

gender identity), disability, or marital 

status, or age, and the producer’s status 

as a cooperative)—has no place in the 

market for livestock and poultry. 

Prejudices, disadvantages, inhibitions 

on market access, or otherwise adverse 

actions against covered producers on 

these bases must fundamentally be 

viewed as unjust forms of 

discrimination, lest the word unjust be 

unmoored from its plain meaning. 

Moreover, this rule addresses the 

unique and often difficult-to-prove 

discriminatory conduct that has long 

existed in the agricultural sector. 

Demographic information is seldom 

recorded in agricultural transactions; 

therefore, it is difficult to quantify 

discrimination. However, as the 

preamble set forth, agricultural markets 

are not representative of the population 

as a whole, for reasons in part arising 

from a well-established track record of 

unjust discrimination from USDA itself. 

Unjust discrimination on the bases set 

forth in this rule does not stem solely 

from USDA’s actions, rather it was 

widespread across society. 

Discrimination and prejudice have not 

been eliminated from society, and 

heightened steps are appropriate to 

prevent unjust discrimination from 

coloring public or private decisionmaking. Such clarity is especially 

important in today’s highly 

concentrated agricultural markets, with 

few minority participants, as the lack of 

competition means that failure of 

inclusion for all farmers gives rise to a 

competitive harm under the Act. 

AMS recognizes that section 1981 of 

the Civil Rights Act establishes that 

certain rights are to be guaranteed, and 

these rights are to be protected against 

impairment by nongovernment and state 

discrimination. This rule addresses 

prohibited conduct specifically in the 

agricultural sector and is not superseded 

by section 1981. By expressly stating 

prohibited conduct that is violative of 

the Act, this rule seeks to allow AMS to 

better enforce the Act. AMS 

acknowledges that multiple USDAadministered statutes explicitly refer to 

socially disadvantaged groups and 

socially disadvantaged farmers or 

ranchers but underscores that AMS has 

replaced the definition of ‘‘market 

vulnerable individual’’ (which was 

more closely aligned with the 

formulations under those laws) with a 

simpler set of prohibited bases. And for 

the reasons described above, AMS’s 

interpretation of the Act is faithful to its 

text and purposes. AMS notes that 

comments indicated that the Act in fact 

does prohibit the conduct set forth in 

this rule, in which case the rule will 

function to clarify and explicate already 

prohibited conduct. 

AMS notes commenters’ argument 

that § 201.304(a) covers similar conduct 

as the Civil Rights Act of 1964, the 

Agricultural Fair Practices Act (AFPA), 

and the Robinson-Patman Act. However, 

the fact that such conduct is prohibited 

under those statutes does not mean that 

it is not also prohibited by the P&S Act, 

which is broader in scope than other 

antitrust laws.205 AMS believes it is 

appropriate to provide clarity regarding 

application of the Act because AMS has 

the authority to enforce the Act (and the 

AFPA), and not the Civil Rights Act of 

1964 or the Robinson-Patman Act, with 

respect to livestock and poultry. The 

Act provides supplemental and parallel 

coverage to the AFPA, making its 

application appropriate and valuable to 

livestock producers and poultry growers 

who have, over the years, found it 

challenging to earn the full value of 

their animals in their dealings with 

packers and live poultry dealers. 

Similarly, AMS disagrees with 

commenters’ argument that § 201.304(b), 

which prohibits retaliation, is 

unnecessary because these protections 

are already afforded by the AFPA, the 

Capper-Volstead Act, and other laws 

which specifically protect farmers from 

retaliation for acting as a witness in a 

Federal investigation. USDA has 

continually received complaints from 

producers regarding retaliatory 

practices. Therefore, AMS concludes 

that promulgating these rules under the 

authority of the Act is necessary to 

address these concerns. 

Therefore, AMS makes no changes to 

the rule as proposed in response to 

these comments. 

Comment: A legal foundation and a 

cattle industry trade association claimed 

AMS’s decision to broadly restrict 

discrimination against ‘‘market 

vulnerable’’ individuals exceeds its 

statutory authority. One commenter said 

this decision, and its likely result of 

leaving courts to flesh out the vague 

definition to determine whom the 

proposed rule should protect, is 

inconsistent with Congress’s 

longstanding and repeated choices to 

ban discrimination using an approach 

based on protected classifications. 

Another commenter said AMS acts 

beyond its authority in proposing a 

broad definition of ‘‘market vulnerable’’ 

individuals because its goal in taking 

such an approach is to ensure that the 

rule can address prejudice based on 

categories such as sexual orientation or 

gender identity. According to the 

commenter, AMS cannot redefine the 

meaning of the key terms ‘‘undue 

prejudice’’ and ‘‘unjust discrimination’’ 

under the Act to include protections 

based on these categories because the 

Congress that enacted the Act in 1921 

would not have contemplated such 

protections. The commenter further 

critiqued AMS’s citation of Bostock v. 

Clayton County 206 to support its 

approach. According to the commenter, 

Bostock, which establishes that 

discriminating against an individual for 

being lesbian, gay, transgender, or 


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16166 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

207Section 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.’’ 

208 15 U.S.C. 1691c(a)(5). 

209 140 S. Ct. 1731, 1741 (2020). 

210https://www.consumerfinance.gov/about-us/ 

newsroom/cfpb-clarifies-discrimination-by-lenderson-basis-of-sexual-orientation-and-gender-identityis-illegal/. 

211https://www.federalregister.gov/documents/ 

2014/07/16/2014-16325/nondiscrimination-inprograms-or-activities-conducted-by-the-unitedstates-department-of-agriculture. 

212 Mahon v. Stowers, 416 U.S. 100, 112 (1974)). 

Section 407 of the Act (7 U.S.C. 228) also provides 

that the Secretary ‘‘may make such rules, 

regulations, and orders as may be necessary to carry 

out the provisions of this Act.’’ 

213Statement of General Policy Under the Packers 

and Stockyards Act published by the Secretary of 

Agriculture in 1968 (Statement of General Policy) 

(9 CFR 203.12(f)). 

214See Federal Trade Commission v. Passport 

Automotive Group, Inc., No. 8:22–cv–02670 (D. Md. 

filed Oct. 18, 2022) (Settlement resulting from FTC 

allegations that Passport’s discriminatory conduct, 

including charging Black and Latino customers 

interest-rate markups not tied to creditworthiness, 

violated the ‘‘unfairness’’ prong of Section 5 of the 

FTC Act); Michael Kades, ‘‘Protecting Livestock 

Producers and Chicken Growers,’’ Washington 

Center for Equitable Growth (May 5, 2022), 

available at Protecting livestock producers and 

chicken growers—Equitable Growth. 

215See 7 U.S.C. 193. Cf. Mitchell v. United States, 

313 U.S. 80, 94 (1941)). 

216Terry v. Tyson Farms, Inc., 604 F.3d 272, 276– 

79 (6th Cir. 2010); Wheeler v. Pilgrim’s Pride Corp., 

591 F.3d 355 (5th Cir. 2009) (en banc); Been v. O.K. 

Indus., Inc., 495 F.3d 1217, 1230 (10th Cir. 2007); 

Pickett v. Tyson Fresh Meats, Inc., 420 F.3d 1272, 

1280 (11th Cir. 2005), cert. denied, 547 U.S. 1040 

(2006); London v. Fieldale Farms Corp., 410 F.3d 

1295, 1303 (11th Cir.), cert. denied, 546 U.S. 1034 

(2005); IBP, Inc. v. Glickman, 187 F.3d 974, 977 (8th 

Cir. 1999); Philson v. Goldsboro Milling Co., 1998 

WL 709324 at *4–5 (4th Cir., Oct. 5, 1998); Jackson 

v. Swift Eckrich, Inc., 53 F.3d 1452, 1458 (8th Cir. 

1995); Farrow v. United States Dep’t of Agric., 760 

F.2d 211, 215 (8th Cir. 1985); De Jong, 618 F.2d at 

1336–37; Pac. Trading Co. v. Wilson & Co., 547 F.2d 

367, 369–70 (7th Cir. 1976); see also Armour & Co., 

402 F.2d 712. 

217See In re Pilgrim’s Pride, 728 F.3d 457, 460 

(5th Cir. 2013) Been, 495 F.3d at 1231 Swift & Co. 

v. US, 393 F.3d 247, 253 (7th Cir. 1968) Swift & Co. 

v. United States, 308 F.3d 849, 853 (7th Cir. 1962). 

queer, constitutes discrimination on the 

basis of sex or gender prejudices, is in 

fact limited to an employment context 

and does not apply to contract 

arrangements. 

AMS Response: AMS accepts the 

comment that it would be burdensome 

for the courts to flesh out the vague 

definition of ‘‘market vulnerable 

individual’’ to determine who the 

proposed rule should protect and that 

the approach is inconsistent with 

Congress’s longstanding and repeated 

choices to ban unjust discrimination 

using an approach based on protected 

classifications. Accordingly, AMS is 

adopting specific prohibited bases in 

this final rule. 

AMS rejects the commenter’s view 

that it is beyond the authority of the Act 

for AMS to address prejudice based on 

categories, such as sexual orientation or 

gender identity, because the Congress 

that enacted the Act in 1921 would not 

have contemplated such protections. 

The Act specifically addressed ‘‘unjust 

discrimination’’ and ‘‘undue prejudice’’ 

and left it to the Secretary to set out the 

scope of equitable terms such as 

‘‘unjust’’ and ‘‘undue,’’ as well as 

‘‘unfair.’’ 207 Moreover, ECOA 

prohibitions on discrimination in the 

extension of credit—which includes 

many of the protected bases covered by 

this final rule, including sex, shall be 

enforced under the P&S Act. Therefore, 

a violation of ECOA (if committed by a 

regulated entity) is also violation of the 

P&S Act.208 It is widely accepted, 

following Bostock v. Clayton Cnty 209

and other cases, that the term ‘‘sex’’ 

covers sexual orientation and gender 

identity and the categorization as such 

is not limited to employment law.210

Moreover, since 2014, USDA has 

prohibited discrimination on those 

bases in all of USDA’s Conducted 

Programs.211

Comment: Industry trade associations 

said proposed § 201.304(a) 

inappropriately fails to incorporate the 

requirement from section 202(b) of the 

Act that a prejudice or disadvantage be 

‘‘undue or unreasonable’’ to constitute a 

violation. The commenters said this 

provision would go against precedent 

which has concluded that the Act, as 

well as the broader antitrust regime, 

allows actions such as refusal to deal or 

non-renewal of a contract when 

conducted reasonably. One commenter 

said AMS exceeds its authority in 

omitting this statutory requirement from 

the proposed rule. 

AMS Response: Under Act precedent, 

the Secretary is authorized to determine 

whether discriminatory conduct is 

‘‘undue’’ or ‘‘unreasonable.’’ 212 The 

Secretary has in the past interpreted 

similar provisions governing stockyards 

to include prohibitions on 

discrimination on similar bases.213

Moreover, multiple precedents interpret 

the unfair practices provisions of sec. 5 

of the FTC Act to incorporate 

discrimination on race, sex, and similar 

prohibited bases.214 The ICA’s 

provisions barring unjust discrimination 

too, have been interpreted to bar 

discrimination on the protected 

bases.215 Therefore, this rule is within 

the Secretary’s authority under secs. 

202(a) and (b) of the Act. Under Act 

precedent, whether discriminatory 

conduct amounts to being ‘‘undue’’ or 

‘‘unreasonable’’ is a determination that 

the statute provides broad discretion to 

the Secretary to determine. Advantages 

are not a component of this rule instead 

the rule focuses on prohibiting conduct 

that disadvantages producers based on 

characteristics unrelated to the quality 

of their products or services. 

Comment: Multiple industry 

companies and associations, another 

organization, and an individual 

contended that AMS unlawfully 

rejected precedent by asserting that 

discriminatory conduct can violate secs. 

202(a) or (b) of the Act without 

demonstrating injury, or likelihood of 

injury, to competition. The commenters 

cited legislative history and judicial 

precedent to argue that the Act is 

fundamentally an antitrust statute and is 

thus bound by the key antitrust 

principle of preventing harm to 

competition. Commenters said 

Congress’s main concern in enacting the 

Act was preventing harm to competition 

from meatpacker monopolies and that, 

in drafting the Act, Congress used the 

basic blueprint of the Sherman Act and 

other existing antitrust statutes, which 

distinguish between fair competition 

and undesirable predatory competition. 

Commenters said interpreting secs. 

202(a) and (b) to require plaintiffs to 

prove actual or likely harm to 

competition thus promotes the Act’s 

main purpose of protecting healthy 

competition in the meatpacking 

industry. Commenters also cited 

numerous court cases holding that the 

Act requires a showing of injury to 

competition, including rulings spanning 

eight circuits.216 The commenters 

argued AMS’s approach would open the 

door to baseless litigation and increased 

costs to industry. A commenter argued 

that, in the absence of the harm-tocompetition standard, courts will use a 

range of inconsistent means to establish 

violations of the Act, meaning 

individual cases will more likely require 

judicial resolution despite AMS’s claim 

that its proposed approach will reduce 

litigation. 

AMS Response: Congress designed the 

Act to provide broader protections than 

existing antitrust laws such as the 

Clayton and Sherman Acts due to 

specific challenges in agricultural 

markets.217 The existence of the Act is 

proof that existing antitrust laws were 

not sufficient in protecting livestock 

producers and ensuring fair agricultural 

markets. It is well established that, to 

meet the needs of livestock producers 

more effectively, the Act provides 

broader protections than existing 

antitrust laws. The statutory text, case 

law, and legislative history make plain 

that the Act’s protections extend beyond 


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218See Wilson & Co. v. Benson, 286 F.2d 891, 895 

(7th Cir. 1961); Bowman v. USDA, 363 F.2d 81, 85 

(5th Cir. 1966), Swift, 393 F.3d at 253. 

219Title 9, part 201 of the Code of Federal 

Regulations (CFR). Section 407 of the P&S 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. 220 86 FR 36987, July 9, 2021. 

221See 14 Fletcher Cyc. L. Corps. section 6716 

(2022). See also, e.g., Holden v. Hardy, 169 U.S. 

366, 383 (1898)); Yick Wo, 118 U.S. 356, 373–74; 

(1886); San Bernardino Cnty. v. S. Pac. R. Co., 118 

U.S. 417, 422–23 (1886) (Field, J., concurring); 

Barbier v. Connolly, 113 U.S. 27, 31 (1884); C.R. 

Cases, 109 U.S. 3, 25 (1883); In re State Freight Tax, 

82 U.S. 232, 263 (1872). 

antitrust laws.218 Accordingly, it has 

been the Agency’s longstanding position 

that because the Act addresses more and 

different types of harmful conduct than 

antitrust laws, a showing of competitive 

injury is not required to establish 

violations of secs. 202(a) and 202(b). 

Market abuses such as deception, unjust 

discrimination, and retaliation are 

illegal per se under the act. Addressing 

the harmful conduct this rule aims to 

prevent is squarely within the authority 

of the Secretary and accords with 

Congressional intent.219 Moreover, the 

Secretary, exercising broad authority to 

define the scope of secs. 202(a) and (b), 

has determined that the prohibited 

practices are likely to exclude producers 

from the market, thereby lessening 

competition and causing widespread 

marketplace harm if not addressed in 

their incipiency, before competitive 

injury has occurred. 

Commenters cite several circuit court 

decisions that required a showing of 

harm to competition or a likely harm to 

competition establish a violation of sec. 

202. These cases involved private 

claims and do not control the Agency’s 

statutory authority to promulgate 

regulations. AMS is within its statutory 

authority to promulgate rules that 

‘‘assure fair competition and fair-trade 

practices, to safeguard farmers and 

ranchers . . . to protect consumers . . . 

and to protect members of the livestock, 

meat, and poultry industries from 

unfair, deceptive, unjustly 

discriminatory and monopolistic 

practices. . . .’’ Congress granted the 

Secretary broad authority to determine 

the scope of coverage of terms such as 

‘‘unjust discrimination’’ and ‘‘undue 

prejudice’’ or ‘‘unreasonable 

disadvantage’’ under secs. 202(a) and (b) 

of the Act. 

This rule aims to prevent market 

exclusion of producers who have been 

subjected to unjust discrimination on a 

prohibited basis or based on engaging in 

a protected activity, and to snuff out 

those harms at their incipiency. Based 

on its knowledge of the industry, AMS 

has determined that undue and 

unreasonable prejudice and unjust 

discrimination on the prohibited bases 

and the protected activities identified in 

the rule amount to conduct that 

negatively effects these markets, and 

therefore AMS is establishing these 

regulations to address that conduct at its 

incipiency, when it occurs against a 

single individual. 

Additionally, deceptive conduct 

violative of the Act has routinely been 

enforced on an individual basis absent 

a required showing of any particularized 

harm to competition since the very first 

administrative actions brought by the 

Department. Deceptive conduct often 

takes the form of unfair contract 

formation, enforcement, and 

termination and therefore most 

frequently occurs on an individual 

basis. To require a showing of harm to 

competition to prove deception 

violations under the Act would be 

contrary to longstanding enforcement 

standards and is adverse to the intent of 

the Act to protect farmers and ranchers 

from deception. Furthermore, the 

assertion from commenters that this rule 

will result in costly ‘‘baseless’’ litigation 

is contrary to the findings of AMS. AMS 

has determined that this rule will not 

increase litigation significantly due to 

the assertion by regulated entities, 

through their comments, that they do 

not engage in the conduct this rule aims 

to prohibit. 

Comment: Several advocacy 

organizations and a cattle industry trade 

association supported AMS’s position 

that prohibited conduct under the Act 

need not lead to market-wide harm to 

competition, with some urging AMS to 

explicitly state that a showing of such 

harm is not required under the proposed 

rule. An agricultural and environmental 

organization cited E.O. 14036 on 

Promoting Competition in the American 

Economy,220 which called for a rule 

explicitly stating individuals should be 

able to prevail under the Act without 

proving market-wide harm. This 

commenter argued AMS needs to 

explicitly state its position to stop 

judicial confusion in the face of a 

Federal circuit court split on the 

competitive-harm issue. The commenter 

said that, since the proposed rule 

contains multiple references to both 

USDA’s position on market-wide harm 

to competition and E.O. 14036’s explicit 

direction to incorporate this position 

into a final rule, amending the rule to 

clearly adopt this position would be a 

logical outgrowth of the proposed rule. 

An agricultural advocacy organization 

contended the text, structure, and 

legislative history of the Act indicate 

that it prohibits discrimination based on 

market-vulnerable and protected-class 

status, giving AMS the legal authority to 

promulgate regulations based on this 

interpretation. The commenter argued 

the Act’s prohibition of differential 

treatment on an ‘‘unjust,’’ ‘‘undue,’’ or 

‘‘unreasonable’’ basis encompasses all 

forms of discrimination based on a 

producer’s market vulnerability or 

protected classification because it 

includes all actions that adversely 

differentiate between producers without 

a legitimate basis. The commenter said 

that, in using such words in the Act, 

Congress clearly intended to invoke 

national values and policies related to 

fairness and equal treatment, including 

equal protection jurisprudence as it 

existed during enactment. According to 

the commenter, this jurisprudence was 

understood to prohibit essentially 

unjust or arbitrary discrimination 

between persons or corporations ‘‘in a 

similar situation or condition.’’ 221

The commenter next looked at secs. 

202(a) and (b) of the Act in the context 

of the statutory scheme, contrasting 

their broad reach with the more limited 

scope of secs. 202(c) through (f), which 

specifically target business practices 

with anticompetitive effects, and 

arguing this difference implies Congress 

intended for these first two sections to 

apply more expansively. This 

commenter further claimed, if unfair, 

discriminatory, prejudicial, or deceptive 

conduct always required proof of 

market-wide competitive injury, these 

paragraphs would be superfluous 

because paragraph (e), which prohibits 

‘‘any course of business’’ or ‘‘any act’’ 

for the purpose or with the effect of 

causing competitive injury, would 

always apply. The commenter said this 

broad interpretation of secs. 202(a) and 

(b) to include discrimination based on 

protected-class or market-vulnerable 

status easily advances the Act’s 

statutory purpose of ensuring fair 

competition and trade practices in 

livestock markets, noting that this type 

of discrimination reduces output and 

prevents efficient resource allocation by 

restricting certain producers’ ability to 

enter and participate in markets. The 

commenter also said legislators enacting 

the Act sought to broadly address 

imbalances between buyers and sellers 

of livestock, referring in detail to the 

Act’s legislative history for evidence 

that Congress intended for it to have an 

expansive scope, including coverage of 

a wide range of unfair and unjust 

practices. 

The commenter also argued that the 

prohibitions in secs. 202(a) and (b) do 

not merely include intentionally 


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222Chevron U.S.A., Inc. v. Natural Resources 

Defense Council, Inc., 468 U.S. 837 (1984). 

223Herbert Hovenkamp, ‘‘Does the Packers and 

Stockyards Act Require Antitrust Harm?’’ (2011). 

Faculty Scholarship at Penn Carey Law. 1862. 

https://scholarship.law.upenn.edu/faculty_

scholarship/1862; Peter Carstensen, The Packers 

and Stockyards Act: A History of Failure to Date, 

CPI Antitrust Journal 2–7 (April 2010) (‘‘Congress 

sought to ensure that the practices of buyers and 

sellers in livestock (and later poultry) markets were 

fair, reasonable, and transparent. This goal can best 

be described as market facilitating regulation.’’); 

Michael C. Stumo & Douglas J. O’Brien, ‘‘Antitrust 

Unfairness vs. Equitable Unfairness in Farmer/Meat 

Packer Relationships,’’ 8 Drake J. Agric. L. 91 

(2003); Michael Kades, ‘‘Protecting livestock 

producers and chicken growers,’’ Washington 

Center for Equitable Growth (May 2022), https://

equitablegrowth.org/wp-content/uploads/2022/05/ 

050522-packers-stockyards-report.pdf. 

224 87 FR 60018. 

225Extensively discussed in Michael Kades, 

‘‘Protecting livestock producers and chicken 

growers,’’ Washington Center for Equitable Growth 

(May 2022), https://equitablegrowth.org/wpcontent/uploads/2022/05/050522-packersstockyards-report.pdf, among other articles 

referenced above. 

discriminatory actions but also extend 

to actions with a disparate impact on 

covered producers based on their 

protected-class or market-vulnerable 

status. To support this position, the 

commenter noted that sec. 202(a) 

prohibits regulated entities from 

engaging in practices or using devices 

that are ‘‘unjustly discriminatory,’’ 

rather than simply prohibiting them 

from actively discriminating, and that 

sec. 202(b) prohibits regulated entities 

from ‘‘subject[ing]’’ persons or localities 

to undue or unreasonable prejudices or 

disadvantages, arguing that both 

provisions specifically use language 

intended to encompass non-intentional 

actions. 

The commenter further argued that 

AMS holds authority to interpret the 

meaning of sec. 202 and identify 

practices that violate its prohibitions. 

The commenter said Congress modeled 

USDA’s role under the Act on that of the 

Federal Trade Commission under the 

FTC Act, envisioning an authority with 

broad jurisdiction and power. 

According to the commenter, Congress 

even went beyond the FTC Act model 

in one respect in its grant of authority 

to USDA, with sec. 407 of the Act giving 

USDA unequivocal authority to 

promulgate rules as needed to carry out 

its provisions. The commenter also said 

many court decisions have given strong 

deference to USDA determinations on 

whether a practice violates the Act, 

relying on reasoning that the facts of 

individual cases determine the meaning 

of the Act’s operative terms, and that 

USDA is responsible for efficiently 

regulating market agencies and packers. 

Finally, the commenter argued 

‘‘Chevron deference’’ 222 applies to 

USDA interpretations of the Act 

regarding differential treatment because 

these interpretations would be 

promulgated pursuant to express 

delegation of rulemaking authority as 

given in sec. 407, fill in the gaps 

Congress left in sec. 202, reflect a 

permissible construction of the statutory 

text that aligns with the statute’s 

purpose, and take advantage of USDA 

expertise regarding the details of 

livestock production and marketing. 

One commenter recommended the 

following proposed regulatory text 

language to explicitly state violations of 

the proposed rule require no showing of 

competitive harm: 

§ 201.308 No Requirement to Cause 

Market-Wide Harm 

Where a regulated entity commits conduct 

prohibited by Subpart 201.302–201.306, such 

conduct violates §§ 202(a) and (b) of the Act 

whether or not market-wide harm to 

competition results. The unfair, unjustly 

discriminatory, or deceptive treatment of one 

covered producer, the giving to one covered 

producer of an undue or unreasonable 

preference or advantage, or the subjection of 

one covered producer to an undue or 

unreasonable prejudice or disadvantage in 

any respect violates the Act. 

AMS Response: AMS notes and 

appreciates the comments, but made no 

further changes in response to the 

comments. 

AMS acknowledges the commentors’ 

comments around a showing of harm to 

competition. The meaning of 

competition or harm to competition 

must be broader than its meaning under 

the antitrust laws.223 USDA maintains 

that this consistently held position is 

based on the language, structure, 

purpose, and legislative history of the 

Act, and USDA continues to adhere to 

this longstanding position, 

notwithstanding the disagreement of 

some courts as to the relationship 

between harm to competition and 

violations under the Act. Discrimination 

and undue prejudice on the bases set 

forth in this final rule are both 

essentially unjust and undue as forms of 

unacceptable personal discrimination 

under the Act (drawing on similar 

precedent from the ICA and from P&S 

Act implementation in stockyards), and 

also subvert normal market forces, 

undermine market integrity, and 

deprive producers of the true value of 

their products and services. AMS has 

not incorporated the suggested 

§ 201.308 provisions because the rule 

itself prohibits discrimination against an 

individual producer on the prohibited 

bases or protected activities. The 

proposed rule elaborated on the 

regulatory text, stating ‘‘[t]his proposed 

regulation sets forth specific 

prohibitions on prejudicial or 

discriminatory acts or practices against 

individuals that are sufficient to 

demonstrate violation of the Act 

without the need to further establish 

broad-based, market-wide prejudicial or 

discriminatory outcomes or harms.’’ 224

AMS’s position is that under the Act 

even a single instance of discriminatory 

or prejudicial conduct may violate the 

Act.225 The Act prohibits ‘‘essentially 

unjust’’ discrimination and undue 

prejudice, which AMS has determined 

the provisions of this final rule to 

address. Moreover, discrimination on 

prohibited bases and retaliation on the 

basis of protected activities in livestock 

and poultry markets leads to economic 

inefficiency, and has no procompetitive 

justification. Undue prejudices or 

disadvantages and discriminatory 

practices in a concentrated livestock or 

poultry market inflict economic harm 

through a distortion of market signals 

such as a distortion of market prices and 

exclusion of market participants, which, 

in turn, can lead to disinvestments in 

the livestock and poultry markets and a 

misallocation of scarce resources. 

Deception deprives the seller of the 

benefits of the market, as competitors of 

the initial deceiving regulated entity 

may be induced to likewise engage in 

such practices. When market abuses 

become widespread, market success 

becomes less based on productive 

efficiency or quality and more on who 

can engage in the most abuses, leading 

to allocative inefficiencies and loss of 

social welfare. 

Comment: Commenters representing 

industry perspectives said proposed 

§ 201.306 on deceptive practices is 

outside the scope of the Act because it 

would require all tort or contract 

disputes under the Act to be addressed 

in Federal courts rather than as State 

matters. According to the commenters, 

Congress would have explicitly said so 

if it intended to give AMS wide-ranging 

authority to regulate the specifics of 

livestock industry contracts and 

business practices regardless of their 

effect on competition. According to 

commenters, further evidence that 

Congress did not intend to give the 

agency such authority includes its 

previous rejections of other proposals to 

expand the Act to cover contractual 

matters traditionally covered under 

State law, with Federal courts likewise 

holding that the Act does not cover 

these circumstances. 

A cattle industry trade association 

said this provision also exceeds the 

scope of the Act because AMS’s 

contention that deception does not 


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226 53 F.3d 1452, 1458 (8th Cir. 1995). 

227See Parchman v. U.S. Dep’t of Agric., 852 F.2d 

858, 864 (6th Cir. 1988). 

228Swift & Co. v. United States, 393 F.2d 247, 253 

(7th Cir. 1968). 229 550 F. 2d 717 (10th Cir. 1977). 

require proof of a particularized intent 

contradicts the plain text of the statute 

as it would have been interpreted at 

enactment. According to the 

commenter, Congress at this time would 

have understood meatpacker conduct 

only to be deceptive when committed 

with the intent to deceive a producer. 

The commenter further stated that 

AMS’s arguments that deceptive 

practices under sec. 202 of the Act do 

not necessarily require intent to 

deceive—based on analogy to 

developments in the law of deceptive 

marketing—do not provide sufficient 

support for its position. An organization 

asserted that the proposed rule attempts 

to undercut Federal court rulings, such 

as Jackson v. Swift Eckrich, Inc.,226

which hold that the Act is not intended 

to undermine traditional freedom-ofcontract principles by exposing 

producers to Federal liability if they 

refuse to enter into certain contracts or 

exercise basic contract rights. 

AMS Response: This rule does not 

require all tort or contract disputes 

under the Act to be addressed in Federal 

courts rather than as State matters. It 

only addresses the specific prohibited 

conduct covered by the rule. Moreover, 

in secs. 202(a) and (b), Congress gave 

broad authority to the Secretary to 

establish the scope of Federal 

protections governing transactions in 

livestock and poultry, given the 

interstate nature of the industry. 

The Act does not require proof of a 

particularized intent to deceive.227 This 

rule does not inhibit freedom to contract 

by exposing producers to liability if they 

refuse to enter into a contract.228 It 

addresses undue prejudice, retaliation, 

and deception which may occur at 

various stages of the contracting 

process, including the stage when a 

refusal to deal may amount to 

discrimination on the bases of 

prohibited categories specified in the 

final rule or a deceptive practice when 

distorted owing to an untrue statement. 

Therefore, this rule does not contradict 

the holding in Jackson v. Swift Eckrich, 

Inc. Accordingly, AMS made no 

changes to the rule in response to these 

comments. 

Comment: Cattle industry trade 

associations argued the proposed rule 

also represents an inappropriate attempt 

to regulate commercial feed yards under 

the Act, saying AMS improperly cites 

Solomon Valley Feedlot Inc. v. 

Butz 229—a case holding that feed yards 

are not regulated entities under the 

Act—to support its reference to surety 

bonds as one means to protect farmers 

and consumers from unfair practices 

under the Act. According to the 

commenters, AMS’s citation in this 

context suggests commercial feed yards 

are required to post bonds despite the 

case holding that they are not regulated 

entities and thus do not need to do so. 

A commenter further said this 

inaccurate citation, combined with the 

proposed rule’s overbroad definition of 

‘‘livestock producer,’’ suggests AMS is 

trying to regulate feed yards under the 

Act despite both Congressional intent 

and judicial precedent supporting their 

exclusion. 

AMS Response: AMS respectfully 

considers these comments to be outside 

the scope of this rulemaking. To be 

clear, AMS does not intend to refute the 

court’s holding in Solomon Valley that 

feedlots are unregulated. Nor does the 

rule make any attempt to define 

‘‘regulated entities’’ to include feedlots. 

This final rule prohibits regulated 

entities from engaging in deceptive 

practices. Regulated entities include 

packers, swine contractors, and live 

poultry dealers. The rule protects 

feedlots as livestock producers from 

undue prejudice, retaliation, and 

deception. AMS sees no reason for the 

commenter’s argument that the 

definition of livestock producers should 

exclude feedlots, except to the extent 

that the feedlot is acting as a dealer 

under the Act. This rule does not 

attempt to regulate the behavior of 

livestock dealers or feedlots in any 

capacity. The Solomon Valley decision, 

which shows it is a deceptive practice 

for a regulated entity to fail to maintain 

a bond, was cited in the proposed rule 

to provide an example of what the court 

has found constitutes a deceptive 

practice. 

ii. Congressional Direction 

Comment: Live poultry dealers and 

poultry industry trade associations said 

Congressional authority for AMS to 

issue the proposed rule has expired 

because the agency did not promulgate 

it within the deadline set by the 2008 

Farm Bill. A commenter said this Farm 

Bill included language asking GIPSA, 

the agency formerly in charge of 

implementing the Act, to promulgate 

new regulations dealing with several 

sections of the Act. The commenter 

noted that section 11006 of the 2008 

Farm Bill tasked AMS with writing new 

regulations establishing criteria to 

determine four issues, including 

whether an undue or unreasonable 

preference or advantage has occurred in 

violation of the Act. Section 11006 

included a timeline, requiring AMS to 

promulgate these new regulations no 

later than two years after the Farm Bill’s 

May 22, 2008, enactment. However, 

AMS did not publish the proposed rule 

for comment until October 3, 2022, 

nearly 12 years after the Farm Bill 

deadline expired. According to the 

commenter, finalizing the proposed rule 

would therefore unconstitutionally 

exceed the scope of Congress’s grant of 

authority to USDA. 

Likewise, a meat industry trade 

association argued that Congress 

referred to issues relating to socially 

disadvantaged farmers and ranchers in 

other parts of the 2008 Farm Bill but 

failed to do so in the context of its 

direction for rulemaking under the Act; 

therefore, it is reasonable to assume 

Congress did not seek to address such 

topics under the Act. 

AMS Response: AMS respectfully 

considers these comments to be outside 

the scope of this rule. The 2008 Farm 

Bill’s directive that GIPSA promulgate 

rulemaking pertaining to the Act does 

not restrict USDA’s and AMS’s 

authority to conduct this rulemaking 

and thus effectuate the purposes of the 

Act. 

Further, as noted earlier, Executive 

Order 14036 directs the Secretary to 

address unfair treatment of farmers and 

improve conditions of competition in 

their markets by considering rulemaking 

to address, among other things, certain 

market abuses and anticompetitive 

practices in the livestock, poultry, and 

related markets, including unjustly 

discriminatory, unduly prejudicial, and 

deceptive practices—in particular 

retaliation. This final rule is responsive 

to the Executive Order. 

Comment: A cattle industry trade 

association and a live poultry dealer 

argued that, in addition to taking 

advantage of an expired grant of 

authority, the proposed rule also 

extends beyond the scope of the original 

Congressional authority to amend the 

Act. Commenters said issues not 

covered under the Farm Bill grant 

include the introduction of a vague and 

ambiguous definition of ‘‘market 

vulnerable individual;’’ a determination 

that proof of anticompetitive harm is no 

longer necessary to prevail under secs. 

202(a) or (b) of the Act; and regulation 

of deceptive practices and of 

recordkeeping. 

AMS Response: As stated by 

Congress, the purpose of the Act is ‘‘to 

assure fair competition and fair trade 

practices, to safeguard farmers and 

ranchers . . . to protect consumers . . . 


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230West Virginia v. EPA, 142 S. Ct. 2587, 2613– 

14 (2022). 

231 Id. at 2612, 2610; NFIB v. OSHA, 142 S. Ct. 

661, 666 (2022) (per curiam). 

232 42 U.S.C. 2000e-2; E.E.O.C., Coverage, https:// 

www.eeoc.gov/employers/coverage.cfm (last visited 

Jan. 1, 2023); see also Health Care Workers and the 

Americans with Disabilities Act, https://www.

eeoc.gov/laws/guidance/health-care-workers-andamericans-disabilitiesact#:∼:text=

While%20the%20ADA’s%20

protections%20apply,does%20not

%20cover%20independent20contractors (last 

visited Jan. 1, 2023) (‘‘While the ADA’s protections 

apply to applicants and employees, the statute does 

not cover independent contractors.’’); 29 U.S.C. 623; 

E.E.O.C., Coverage, https://www.eeoc.gov/ 

employers/coverage-0#:∼:text=

People%20who%20are%20not

%20employed,by%20the%20anti

%2Ddiscrimination%20laws (last visited Jan. 1, 

2023) (‘‘People who are not employed by the 

employer, such as independent contractors, are not 

covered by the antidiscrimination laws.’’). 

233House Report No. 67–77, at 2 (1921). 

234House Report No. 67–324, at 3 (1921). 235See 85 FR 79779. 

and to protect members of the livestock, 

meat, and poultry industries from 

unfair, deceptive, unjustly 

discriminatory and monopolistic 

practices. . . .’’ This regulation bans 

behavior that is unjustly discriminatory, 

unreasonably prejudicial and 

disadvantageous, and deceptive. AMS 

has addressed the other matters raised 

by the commenter in previous comment 

responses. 

Comment: Multiple industry 

commenters argued that the proposed 

rule triggers the major questions 

doctrine under West Virginia v. EPA, 

under which an agency lacks authority 

to take politically or economically 

significant regulatory actions without 

‘‘clear congressional authorization.’’ 230

Commenters said the Supreme Court 

has indicated particular concern where 

an agency fundamentally changes the 

regulatory scheme under a statute, seeks 

to adopt a rule Congress has clearly and 

repeatedly declined to enact, or claims 

broad authority for which there is a lack 

of historical precedent, arguing that the 

proposed rule raises all three of these 

issues.231 Commenters argued that the 

Act has long been understood to be 

grounded in antitrust principles and has 

never in its hundred-year history been 

used to broadly address the kind of 

discriminatory conduct covered in the 

proposed rule. The commenters further 

claim that the proposed rule’s treatment 

of the Act as an antidiscrimination 

statute also unprecedently extends past 

the scope of other such laws by targeting 

discrimination against independent 

contractors rather than employees.232

They also note that, in addition to 

declining to apply the Act as an 

antidiscrimination statute, Congress has 

also declined to adopt any general 

prohibitions on discrimination in 

contracting extending beyond the ban 

on racial discrimination in 42 U.S.C. 

1981. The commenters stressed that it 

would be the role of Congress, not AMS, 

to decide to apply the Act like an 

antidiscrimination statute. According to 

the commenters, specific aspects of the 

proposed rule that trigger this doctrine 

include the elimination of the harm-tocompetition standard, the creation of a 

definition of ‘‘market vulnerable 

individuals,’’ the identification of 

conduct constituting deceptive conduct, 

and the 5-year document retention 

mandate for regulated entities. 

AMS Response: As discussed in the 

preamble to this final rule, Congress 

enacted the Act after many years of 

concern about farmers and ranchers 

being cheated and mistreated. In the 

Act, Congress gave the Secretary broad 

authority to regulate the meatpacking 

industry. Congress believed that existing 

antitrust and market regulatory laws, 

including the Sherman Act and Federal 

Trade Commission Act, did not 

sufficiently protect farmers and 

ranchers. In the Act, Congress gave the 

Secretary broad authority to regulate the 

meatpacking industry. The House of 

Representatives’ report on the Act stated 

that it was the ‘‘most comprehensive 

measure and extends farther than any 

previous law in the regulation of private 

business, in time of peace, except 

possibly the interstate commerce 

act.’’ 233 The Conference Report on the 

Act stated that: ‘‘Congress intends to 

exercise, in the bill, the fullest control 

of the packers and stockyards which the 

Constitution permits. . . .’’ 234

Congress considered this a power 

beyond the authority that of the FTC 

and the Interstate Commerce 

Commission. 

This rule’s interpretations of unjust 

discrimination, undue and unreasonable 

prejudice, and retaliation are consistent 

with longstanding approaches to 

protecting producers under the Act, are 

consistent with interpretations of 

similar provisions of sec. 5 of the FTC 

Act and the ICA, and mirror 

congressional policy as reflected in 

ECOA. Moreover, Congress as recently 

as 2008 directed USDA to conduct 

rulemakings on sec. 202, which led to 

the 2020 Rule discussed above on 

undue preferences. The 2020 Rule 

wrestles with questions of undue 

prejudices which this final rule settles. 

Deception similarly follows a long line 

of cases and rules covering deceptive 

practices under the Act. Regarding 

issues raised by commenters around the 

major question doctrine, this rule does 

not address political matters, nor does it 

focus on fixing purely economic harms. 

This rule aims to increase protections 

for producers by clarifying that secs. 202 

(a) and (b) of the Act prohibit 

discriminatory, retaliatory, and 

deceptive conduct by regulated entities. 

iii. Legal Justification 

Comment: Live poultry dealers and 

industry associations argued that the 

administrative record for the proposed 

rule fails to support a rulemaking. 

Commenters contended AMS has failed 

to identify any actual harmful conduct 

that would justify the proposed rule. 

Several commenters criticized specific 

aspects of the record, saying the court 

cases providing examples of alleged 

violations of the Act seem to be 

‘‘opportunistically selected’’ and 

inaccurately cited, while the 

discussions of previous rulemaking 

efforts, many of which were withdrawn 

after Congressional objection, do not 

provide legitimacy. The commenters 

said, rather than basing its justification 

on facts, AMS instead acted arbitrarily 

and capriciously in supporting it with 

unverifiable anecdotal evidence and 

anonymous sources. A cattle industry 

trade association said that the proposed 

rule is too reliant on unexplained 

anecdotal evidence and suggested AMS 

has compounded this problem by 

encouraging commenters to respond 

anonymously. 

A commenter said AMS aggravates 

these issues by inviting more 

anonymous feedback in its request for 

comment on the proposed rule, making 

it difficult to assess commenters’ 

credibility, encouraging more false or 

unverifiable anecdotes, and further 

weakening the evidentiary foundation of 

the eventual final rule. The commenter 

urged AMS to reopen the comment 

period after clarifying that it will not 

give anonymous anecdotes 

disproportionate weight. Another 

commenter said, as AMS explicitly left 

racially discriminatory practices off its 

list of criteria for finding undue or 

unreasonable preferences under the Act 

in promulgating the final rule codified 

at 9 CFR 201.211,235 it must explain its 

rationale for reversing its position to 

determine that the Act now covers 

protected-class discrimination. 

AMS Response: AMS disagrees with 

commenters’ argument that the 

administrative record for the proposed 

rule fails to support this rulemaking. 

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.’’ Under the APA, 

an Agency may conduct rulemaking to 


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Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 16171 

236 FCC v. Fox Television Stations, 556 U.S. 502, 

514 (2009). 

237 ‘‘Competition and Discrimination—is there is 

a relationship between livestock prices received 

and whether the grower is in a historically 

underserved group?’’ 2023 AAEA Annual Meeting, 

Washington, DC, July 23–July 25, 2023. 

238Breneman, V., Cooper, J. Nemec Boeme, R. and 

Kohl, M. ‘‘Competition and Discrimination—is 

there is a relationship between livestock prices 

received and whether the grower is in a historically 

underserved group?’’ 2023 AAEA Annual Meeting, 

Washington, DC, July 23–July 25. 

revise prior positions if it can show that 

there are ‘‘good reasons’’ for the change 

and that the ‘‘new policy is permissible 

under the statute.’’ 236 AMS gathered 

evidence from livestock producer and 

poultry grower testimonies, 

Congressional testimonies, DOJ and 

USDA public workshops, case law, and 

economic data. AMS has gathered 

economic data on disparities between 

white farmers and ranchers and other 

racial and ethnic groups. This data is 

presented in Figure 5 and highlights the 

need for this rulemaking to provide fair 

access to markets for all producers. 

Preliminary empirical results indicate 

that there are some systemic differences 

in prices received across ethnic/racial 

groups after accounting for regional 

fixed effects and marketing variables. 

Relative to White producers, historically 

underserved Black and American Indian 

groups receive lower cattle prices; Black 

groups receive lower contract broiler 

prices, and Black and American Indian 

groups receive lower hog prices.237

The provisions in this rule are basic, 

fundamental protections against 

discrimination on prohibited bases as 

authorized by the Act and as consistent 

with congressional policy. The 

prohibition on retaliation protects the 

ability for producers to communicate 

with governmental entities, associate, 

cooperate, and compete. The 

prohibitions on deception are equally 

basic. These basic and fundamental 

provisions are justified with the record 

presented. Decades of complaints by 

producers, include public hearings with 

the Department of Justice, have 

catalogued how vertical integration and 

market concentration have left 

producers unable to avoid adverse 

treatment that tends to exclude them 

from the marketplace, including 

retaliation preventing them from even 

reporting these concerns to 

governmental authorities. The result has 

been producers unable to bargain 

effectively in the marketplace or fully 

obtain the benefits of their livestock 

production and poultry grow out 

services. Regulated entities consistently 

assert they do not engage in such 

practices; if so, then the burdens from 

adopting this rule are low. 

AMS is not reopening the comment 

period for this rule. Consistent with the 

Administrative Procedure Act, all 

interested persons had an opportunity 

to comment and the agency has 

considered all relevant matter received 

through the public comment process. 

AMS does not agree that it has 

reversed its position with respect to the 

rationale underpinning the rule 

promulgating § 201.211. This final rule 

addresses undue and unreasonable 

prejudices and disadvantages and unjust 

discrimination. Conversely, the rule 

implementing § 201.211 addressed 

undue and unreasonable preferences 

and advantages. AMS may return to the 

question of undue and unreasonable 

preferences and advantages in future 

rulemaking but does not have at this 

time any further information to offer 

with respect to how AMS would or 

would not apply the Act’s prohibition 

on undue or unreasonable preferences 

or advantages. AMS is not making any 

further changes in response to this 

comment. 

Comment: A cattle industry 

association said AMS has provided no 

meaningful evidence of discrimination 

on grounds other than race, saying 

evidence of the latter is unnecessary 

because racial discrimination in private 

contracting is already prohibited. 

According to the commenter, AMS also 

has provided no evidence that would 

justify its proposal to establish a broad 

market vulnerable producer approach to 

discrimination. This commenter also 

criticized AMS’s citation of disparities 

in farm size and income along racial and 

ethnic lines. It said the agency confuses 

correlation and causation by arguing 

that smaller minority-owned farms 

necessarily have a harder time 

competing because of race 

discrimination when it has merely 

shown that minority-owned farms tend 

to be smaller and that any smaller farms 

tend to face competitive disadvantages 

compared to larger ones. 

AMS Response: The existence of the 

continued correlation suggests the 

continued persistence of problems, and 

accordingly the need for additional 

clarity regarding the enforcement of the 

Act. To the extent that the activities 

covered are already prohibited, then the 

clarity provided by this rule should 

place no new burdens on industry with 

respect to compliance. Additionally, 

AMS has adopted in its final rule a list 

of prohibited bases for undue and 

unreasonable prejudice and 

disadvantages instead of using the term 

‘‘market vulnerable,’’ therefore 

addressing commenters’ concerns 

around the term’s broadness. 

Recent research conducted by the 

USDA’s Office of the Chief Economist 

and presented at the American 

Association for Agricultural 

Economics 238 suggests that certain 

ethnic or racial groups may be suffering 

currently from discrimination by 

packers in the establishment and/or 

performance of livestock and poultry 

contracts. Qualitatively, the research 

found consistent differences in prices 

received for livestock (cattle and hogs) 

and broiler products across ethnic or 

racial groups after controlling for 

variables such as farm size, regional 

differences, type of marketing contract 

or channel, organic certification status, 

distance to closest packer, and size of 

closest packer. Limitations of the study 

include that it is unable to control for 

all animal characteristics and cannot 

separate disparate economic outcomes 

arising from current racial 

discrimination from disparate economic 

outcomes due to historical 

discrimination. 

Comment: A cattle industry 

association said the proposed rule is 

arbitrary and capricious because AMS 

has yet to release several related 

proposals dealing with rulemakings 

under the Act. The commenter notes 

that sec. 553(c) of the Administrative 

Procedure Act requires agencies to give 

interested parties a ‘‘reasonable’’ and 

‘‘meaningful’’ opportunity to participate 

in the rulemaking, then argues that 

AMS’s failure to disclose how this 

proposed rule will fit in with other 

related rules addressing poultry and 

livestock contractors under the Act does 

not meet this standard because it does 

not give parties a chance to respond to 

the rulemaking actions as a whole. 

AMS Response: That previous 

rulemaking efforts, such as those 

published in 2016, tied multiple 

rulemakings together with respect to 

certain assumptions in their cost-benefit 

analysis is not dispositive on how this 

set of rulemakings—which are entirely 

different and unconnected to the 2016 

effort—should be designed or presented 

for public comment. This final rule is a 

logical outgrowth of the rule as 

proposed and does not in any way 

depend upon what AMS may or may 

not propose or finalize in any other 

rules. AMS made no changes to the rule 

based on this comment. 

Comment: A meat industry trade 

association expressed concern because 

AMS stated in the preamble to the 

proposed rule that retaliation may 

include activities other than those listed 

in the proposal. The commenter said the 

statement in the preamble, which says 


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16172 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

239 87 FR 60026, October 3, 2022. 

240 Id. at 60024. 

241See Skilling v. United States, 130 S. Ct. 2896, 

2927–28 (2010). 

the proposed rule is ‘‘designed to 

prohibit all such actions with an 

adverse impact on a covered 

producer,’’ 239 conflicts with another 

statement in the preamble regarding 

§ 201.304(b), which says the proposed 

regulations are ‘‘narrowly tailored, 

requiring the adverse action to be linked 

to specific protected activities,’’ 240

making the rule arbitrary and capricious 

in failing to give useful guidance on 

permissible activities. 

AMS Response: The commenter 

confuses the design of the rule. The 

specific protected activities set forth 

under § 201.304(b)(1) and (2) are 

narrowly tailored and limited to those 

delineated. In contrast, the forms of 

adverse conduct, as set forth in 

201.304(b)(3), are inherently broader 

and more flexible. Additionally, the 

final rule provides greater specificity 

with respect to forms of adverse 

conduct, which are now delineated 

specifically and are no longer subject to 

open-ended addition. 

Therefore, AMS will not make 

changes to the final rule in response to 

this comment. 

iv. Vagueness 

Comment: Commenters argued that 

multiple provisions of the proposed rule 

are so vague and open-ended they 

thwart processors’ ability to determine 

how it may apply to their conduct. 

According to the commenters, these 

provisions raise issues under the Fifth 

Amendment’s Due Process Clause, 

which requires rules of law to define 

unlawful conduct with enough 

specificity to let interested parties 

understand what conduct is prohibited 

and to prevent arbitrary or 

discriminatory application of the 

rule.241

Live poultry dealers and a poultry 

industry trade association said the 

proposed rule is unconstitutionally 

vague because it includes a number of 

poorly defined or undefined terms for 

which failure to comply would result in 

a regulatory violation. The commenters 

said it provides only examples of 

behavior that would constitute a 

prohibited ‘‘prejudice or disadvantage’’ 

or ‘‘retaliation,’’ rather than spelling out 

definitive lists or definitions that 

regulated entities can use to comply 

with the proposed rule. The 

commenters highlighted other terms 

raising vagueness issues, such as 

‘‘generally or ordinarily offered,’’ 

‘‘differential contract performance or 

enforcement,’’ and ‘‘tak[ing] an adverse 

action.’’ These commenters said the rule 

also fails to spell out other concepts 

essential for identifying unlawful 

conduct, such as what would constitute 

a prohibited pretext or a legitimate 

explanation, how the recordkeeping 

requirements would be triggered, or 

what records must be kept. Commenters 

emphasized clear definitions are critical 

for companies to know what is and is 

not allowed under the rule. 

AMS Response: The Due Process 

Clause under the Fifth Amendment 

requires legal matters to be resolved 

according to established rules and 

principles. AMS has adequately 

described the type of conduct 

prohibited under this rule by expressly 

stating that prejudices on specified 

prohibited bases constitutes a violation 

under the Act. These prohibited bases 

expressly draw from ECOA and apply to 

the Act and are explained in this rule 

with the specificity required to give 

notice to interested parties as to what 

conduct is prohibited. Moreover, 

changes in this final rule more clearly 

delineate prohibited bases of 

discrimination in § 201.304(a)(1), 

prohibited prejudicial conduct under 

§ 201.304(a)(2), prohibited retaliatory 

conduct under § 201.304(b)(3), and 

more. Concerns of vagueness are 

addressed by AMS further explaining 

terms in the final rule with the 

specificity needed to thwart claims of 

unconstitutional government action. 

The final rule also provides two new 

specific exceptions that address 

commenters’ concerns regarding the 

proposed rule not including exceptions. 

Furthermore, as explained in response 

to earlier comments, the recordkeeping 

requirement is clear and specific in its 

explanation in requiring regulated 

entities to keep certain records 

pertaining to their business practices 

relating to activities subject to the 

jurisdiction of the Act. 

The terms used in this rule are 

intended to follow their plain language 

meaning, as applied to the livestock and 

poultry industries and within the legal 

framework regulating these industries. 

The following discussion demonstrates 

how these terms support the rule’s 

prohibitions against undue prejudice, 

deception, and retaliation and in fact are 

quite specific. 

‘‘Retaliation’’ is set forth in paragraph 

(b)(3) and encompasses actions taken by 

regulated entities against covered 

producers such as contract termination, 

refusal to renew a contract, offering of 

more unfavorable contract terms than 

those generally or ordinarily offered, 

refusal to deal, interference with thirdparty contracts, and modification of 

contracts on less favorable terms than 

those previously enjoyed in response to 

the producer’s participation in a 

protective activity. What constitutes 

retaliation is clearly defined in the rule, 

and likewise the rule clearly lays out 

protected activities against which 

retaliation is prohibited. 

In this rule, ‘‘generally or ordinarily 

offered’’ terms are terms most producers 

would qualify for when contracting with 

a regulated entity. Whether terms are 

‘‘generally or ordinarily offered’’ is an 

inquiry regarding specific facts and 

circumstances. Each case may vary by 

regulated entity and even for any given 

regulated entity may vary based on how 

the regulated entity would normally 

deal in the circumstances presented by 

the producer in question. However, 

‘‘generally or ordinarily’’ does not apply 

to special contract terms that some 

regulated entities may use with certain 

producers, whether to receive particular 

quality attributes or services or for other 

reasons that are not discrimination on 

prohibited bases. The purpose of the 

rule is to ensure that a covered producer 

is not denied contract terms on the basis 

of a protected class that an ‘‘ordinary’’ 

similarly situated producer could 

receive from the regulated entity. 

‘‘Performing under or forcing a 

contract differently than with similarly 

situated producers’’ refers to situations 

where a regulated entity operates in 

such a way that it denies a grower the 

full benefits to which it is entitled under 

its contract with the regulated entity. A 

poultry grower may seek to enforce a 

production contract term that gives the 

grower the right to receive appropriate 

feed for the grower’s flocks on a timely 

basis in the event the grower regularly 

or at critical times experiences 

insufficient, delayed, or inappropriate 

feed. If a regulated entity threatens to 

terminate a grower’s contract in 

response to the grower’s efforts to 

enforce a particular contract term (a 

protected activity), this retaliatory 

conduct would violate the Act. AMS 

notes that this violation would be 

separate from any violation of contract 

law that may also exist. Another 

example is selective information 

disclosures. These often take the form of 

a regulated entity withholding 

materially relevant information from 

one covered producer that the regulated 

entity generally or ordinarily provides 

to other covered producers. In these 

instances, information-deprived 

producers will have an incomplete 

picture of their business relationships 

with regulated entities, and therefore 

will operate at an unreasonable 

disadvantage relative to producers who 

receive the pertinent information. 


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242Bowman v. United States Dep’t of Agric., 363 

F.2d 81, 85 (5th Cir. 1966) 243Herbert Hovenkamp, ‘‘Does the Packers and 

Stockyards Act Require Antitrust Harm?’’ (2011). 

Faculty Scholarship at Penn Carey Law. 1862. 

https://scholarship.law.upenn.edu/faculty_

scholarship/1862; Peter Carstensen, The Packers 

and Stockyards Act: A History of Failure to Date, 

CPI Antitrust Journal 2–7 (April 2010) (‘‘Congress 

sought to ensure that the practices of buyers and 

sellers in livestock (and later poultry) markets were 

fair, reasonable, and transparent. This goal can best 

be described as market facilitating regulation.’’); 

Michael C. Stumo & Douglas J. O’Brien, ‘‘Antitrust 

Unfairness vs. Equitable Unfairness in Farmer/Meat 

Packer Relationships,’’ 8 Drake J. Agric. L. 91 

(2003); Michael Kades, ‘‘Protecting livestock 

producers and chicken growers,’’ Washington 

Center for Equitable Growth (May 2022), https://

equitablegrowth.org/wp-content/uploads/2022/05/ 

050522-packers-stockyards-report.pdf. 

Furthermore, this rule not only protects 

covered producers from such conduct in 

the form of retaliation. If a regulated 

entity engages in differential contract 

enforcement on the bases of a 

producer’s protected class, this would 

constitute discriminatory conduct in 

violation of § 201.304(a) of this 

regulation. 

‘‘Tak[ing] an adverse action’’ 

encompasses a range of prejudicial, 

deceptive, or retaliatory actions that 

unjustly inhibit market access such as 

prejudice, disadvantage, retaliation, 

deception, or any action that inhibits 

market access to producers. A range of 

actions taken by producers on legitimate 

business grounds can be adverse to 

producer welfare. However, in the 

context of this rule, adverse actions are 

those actions taken by regulated entities 

against producers that either unfairly 

discriminate against producers on the 

basis of a protected class, deceive 

producers, or represent retaliation 

against producers for engaging in 

protected activities such as lawful 

communications, assertion of contract 

rights, associational participation, or 

participating as a witness in any 

proceeding under the Act. 

v. Other Legal Issues 

Comment: A cattle industry trade 

association said the requirement to 

demonstrate harm to competition is 

crucial within its industry because 

packers differentiate cattle values using 

an array of different factors including 

production method, animal handling 

requirements, and program enrollment, 

meaning that seemingly similar lots of 

cattle may be valued substantially 

differently. The commenter expressed 

concern that the results of individual 

adjudications taking place under sec. 

202 of the Act without the threshold of 

a competitive-injury requirement would 

vary significantly, diminishing 

innovation and product differentiation, 

confusing market participants, and 

ultimately harming both producers and 

consumers. A poultry industry trade 

association said that, if AMS seeks to 

establish circumstances in which 

conduct can violate secs. 202(a) and (b) 

without a showing of competitive 

injury, a separate standalone rulemaking 

would be more suitable than inclusion 

in the proposed rule. 

AMS Response: This final rule solely 

addresses the prohibited conduct it 

covers—undue prejudice on prohibited 

bases, retaliation as unjust 

discrimination for engaging in protected 

activities, and certain forms of 

deception. It does not, beyond the 

specific prohibitions, interfere with the 

manner in which packers differentiate 

cattle values using an array of different 

factors including production method, 

animal handling requirements, and 

program enrollment, meaning that 

seemingly similar lots of cattle may be 

valued substantially differently. 

Individual adjudications with respect to 

the conduct covered by this proposed 

rule are essential to effectuate the 

prohibitions set forth in this rule, so as 

to eliminate in their incipiency 

occurrences of undue prejudice on 

prohibited bases and retaliation on 

protected activities.242 The Act 

empowers the Secretary to make the 

determinations around what conduct is 

unreasonable and undue prejudices and 

disadvantages and unjust 

discrimination. It is also wellestablished that deception is a 

prohibition that can be enforced on the 

bases of each individual occurrence. 

Moreover, even where relevant, the 

meaning of competition or harm to 

competition must be broader than its 

meaning under the antitrust laws.243

USDA has previously explained that 

this consistently held position is based 

on the language, structure, purpose, and 

legislative history of the Act, and USDA 

continues to adhere to this longstanding 

position, despite the disagreement of 

some courts as to the relationship 

between harm to competition and 

violations under the Act. See Scope of 

Sections 202(a) and (b) of the Packers 

and Stockyards Act, 82 FR 48596 (Oct. 

18, 2017), (reaffirming that ‘‘USDA has 

adhered to this interpretation of the P&S 

Act for decades’’ and rejecting 

comments that this interpretation is not 

the USDA’s longstanding position). 

Regardless, even if a showing of harm to 

competition were required for an undue 

prejudice or discrimination claim, the 

discriminatory practices prohibited in 

this rule would meet such a 

requirement. Discrimination and undue 

prejudice have no value or place in a 

competitive market, and in fact can lead 

to inefficiencies as personal 

characteristics, not production factors 

influence contracting decisions. 

Ultimately, the conduct at issue is 

squarely within the purposes of the Act. 

Where conduct ‘‘prevents an honest give 

and take in the market,’’ it ‘‘deprives 

market participants of the benefits of 

competition’’ and ‘‘impedes . . . a wellfunctioning market.’’ In its report on the 

1958 amendments to the Act, the U.S. 

House of Representatives explained that 

the statute promotes both ‘‘fair 

competition and fair trade’’ and is 

designed to guard ‘‘against [producers] 

receiving less than the true market value 

of their livestock.’’ Discrimination and 

undue prejudice on the bases set forth 

in this final rule are both essentially 

unjust and undue as forms of 

unacceptable personal discrimination 

under the Act (drawing on similar 

precedent from the ICA and from P&S 

Act implementation in stockyards), and 

also subvert normal market forces, 

undermine market integrity, and 

deprive producers of the true value of 

their products and services. 

Comment: A legal foundation said the 

introduction of a recordkeeping 

requirement for processors may violate 

the due process clause by imposing 

unreasonable burdens on them and may 

exceed the limits of Federal enumerated 

powers under the Constitution. The 

commenter said that, although the 

Supreme Court upheld a recordkeeping 

requirement for banks against a due 

process challenge, the ruling was 

specific to entities receiving public 

funds and does not apply to regulated 

entities under the proposed rule. The 

commenter also contended such 

recordkeeping requirements generally 

lead to warrantless searches of 

businesses, and that these types of 

searches are only authorized for 

pervasively regulated, inherently 

hazardous industries, which likely does 

not apply to the meat or poultry 

industries. 

AMS Response: AMS has authority 

under the Act to regulate certain entities 

and to promulgate rulemaking 

accordingly. The inclusion of a 

recordkeeping requirements serves the 

legitimate purpose to ensure compliance 

with this rule. Recordkeeping is 

regularly a component of rulemaking to 

ensure compliance and allow the 

regulating agency to better monitor 

impacts of the Rule. Regulated entities 

are already subject to a range of 

oversight by AMS subject to the 

longstanding application of the Act. 

Indeed, the Act already requires 

recordkeeping that fully and completely 

discloses the transactions by regulated 

entities of their poultry growing 

arrangements and transactions in 


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16174 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

244Section 401 of the Act requires regulated 

entities to keep ‘‘such accounts, records, and 

memoranda as fully and correctly disclose all 

transactions involved in his business . . .’’ Section 

201.94 of the regulations requires regulated entities 

to give the Secretary ‘‘any information concerning 

the business . . .’’ Section 201.95 of the regulations 

requires that regulated entities provide authorized 

representatives of the Secretary access to their 

plaice of business to examine records pertaining to 

the business. Section 203.4 of the regulations is a 

Statement of General Policy regarding disposition of 

records by regulated entities that records be 

retained for a period of two full years. We have 

interpreted this to mean that records should be 

maintained for the current year to date, plus the 

prior two full years (Jan–Dec). This regulation also 

provides that longer retention periods may be 

required upon notice by the Administrator. 

245 Id. 

246Fischer, Bart, L., Joe L. Outlaw, and David P. 

Anderson, eds. The U.S. Beef Supply Chain: Issues 

and Challenges. Texas A&M University (June 2021) 

available at https://www.afpc.tamu.edu/research/ 

publications/710/cattle.pdf. 

247 GIPSA Livestock and Meat Marketing Study, 

Vol. 1, ES–8 (January 2007). 

livestock, meat, live poultry, etc.244 The 

recordkeeping addressed by this rule is 

to keep records already kept, and is 

within the scope of AMS’s authority 

under the Act.245

Comment: A cattle industry trade 

association said AMS failed to clarify 

the causation standards for proving a 

violation of its new discrimination rule. 

The commenter suggested AMS should 

confirm that the default causation rule 

under tort law applies, meaning a 

violation would require impermissible 

discrimination to be the but-for cause of 

a packer’s contracting decision. 

AMS Response: Although pervasive 

unjust discrimination has in the past 

kept outstanding producers from 

achieving their potential, AMS 

recognizes that adverse actions against 

producers commonly have several 

elements mixed in, some of which may 

include the discrimination or retaliation 

covered by this rule. AMS has set forth 

a standard causation standard: 

‘‘because’’ and ‘‘on the basis of.’’ 

Further cause will be determined in the 

specific facts and circumstances of any 

enforcement matter. Those facts will 

determine whether AMS brings any 

particular matters and AMS expects 

unjust discrimination and retaliation to 

be the principal, or at least substantial, 

part of any decision by the regulated 

entity. Moreover, AMS is choosing not 

to require ‘‘sole’’ causation because 

doing so would undermine the 

effectiveness of the rule and encourage 

after-the-fact revisions of causation. 

Rather, AMS believes that regulated 

entities should have a heightened duty 

to eliminate unjust discrimination on 

the protected basis and retaliation for 

engaging in protected activities. To do 

so, boards of directors and chief 

executive officers may wish to establish 

clear corporate policies, adopt 

procedures to provide for heightened 

managerial supervision for 

circumstances where a close call may 

arise, and implement training across the 

corporate structure. ‘‘Tone at the top’’ 

should direct employees such that 

undue prejudice and retaliation are not 

acceptable forms of conduct, and when 

close calls arise, the regulated entity has 

taken every step reasonably possible to 

ensure that its conduct is focused solely 

on the merits of the producer’s 

performance and the other competitive 

factors that the regulated entity must 

take into account when running its 

business. AMS made no changes to the 

final rule based on this comment. 

L. Other Comments Related to the 

Proposed Rule 

Comment: A cattle industry trade 

association said that AMS has not yet 

made available its proposal for an 

additional related rule concerning 

section 202 of the Act, which must be 

considered alongside the current 

proposal. A meat industry trade 

association likewise cited AMS’s 

anticipation of a ‘‘suite of major actions 

[. . .] to create fairer marketplaces for 

poultry, livestock and hog producers’’ 

and argued that AMS should withdraw 

the current proposal until the entire 

suite of proposals can be submitted 

holistically. Live poultry dealers and 

industry companies, a poultry industry 

trade association, and a swine industry 

trade association concurred that 

piecemeal updates to the Act would 

create challenges and confusion for 

regulated entities and producers. They 

suggested updating regulations 

collectively at one time. 

AMS Response: AMS made no 

changes to the proposed regulations 

based on this comment. AMS 

appreciates the comments regarding the 

desire to view the rules holistically. 

However, AMS is under no obligation to 

make all potential rules available to the 

public simultaneously, regardless of 

their potential connection to 

components of this rulemaking. AMS is 

addressing issues in the livestock and 

poultry sector through its statutorily 

defined authority to administer the Act. 

Federal agencies commonly use separate 

rulemakings to address specific issues 

under their regulatory authority. As 

stated elsewhere, the authority or effect 

of this rule does not in any way depend 

upon the proposal or adoption of any 

other rules, proposed or not yet 

proposed. Accordingly, AMS made no 

changes based on this comment. 

Comment: A cattle industry trade 

association noted that the proposed 

rule’s preamble implied a strong 

relationship between concentration in 

the meatpacking industry and declining 

use of negotiated cash trades, with the 

further implication that the use of 

AMAs in place of cash trades has 

negatively impacted the market and 

rural economies. The commenter said 

that AMAs are not germane to the 

proposed rule and requested 

information on whether AMS intends 

the proposed rule to limit the ability of 

cattle producers to use AMAs. It argued 

that AMAs are critical to funding 

production of more sustainable and 

climate-friendly cattle production. In 

defense of AMAs, the trade association 

cited a 2021 Texas A&M study finding 

that AMAs do not change underlying 

supply-and-demand fundamentals and 

so do not create market power 246 and a 

2007 GIPSA Livestock and Meat 

Marketing Study finding a negative 

effect on producer and consumer 

surplus measures in response to 

reducing AMA use.247 Another cattle 

industry trade association agreed that 

AMAs benefit producers and cautioned 

against any attempts to standardize 

agreements between producers and 

regulated entities through new rules. 

AMS Response: AMS acknowledges 

the commenters’ concerns over the 

relationship between this rulemaking 

and the use of AMAs in the cattle 

industry. According to some in the 

industry, the growth of these vertical 

contracting relationships in the context 

of highly concentrated markets has led 

to concerns that firms have greater 

control over producers and thus have 

more ability to abuse their market 

power, impede producer choices, 

exclude some market participants, and 

coerce producers unwittingly into 

inefficient farm decisions. This rule 

prohibits prejudices on certain 

protected bases that tend to exclude or 

disadvantage covered producers in 

those markets; identifies retaliatory 

practices that interfere with lawful 

communications, assertion of rights, and 

associational participation, among other 

protected activities, as unjust 

discrimination prohibited by the law; 

and identifies deceptive practices that 

violate the Act with respect to contract 

formation, contract performance, 

contract termination, and contract 

refusal. AMS sees no manner in which 

this regulation affects the general 

existence or use of AMAs. Therefore, 

AMS has made no changes to the 

regulations in response to this comment. 

Comment: An industry company 

rejected any implication that food 

companies are withholding critical 

business information from producers 


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248Estimates are available at U.S. Bureau of Labor 

Statistics. Occupational Employment and Wage 

Statistics, available at https://www.bls.gov/oes/ 

special-requests/oesm22all.zip (accessed 7/14/ 

2023). Featured OES Searchable Databases: U.S. 

Bureau of Labor Statistics (bls.gov) (accessed July 

2023). 

and argued that producers are already 

provided critical information required 

to make informed business decisions. It 

suggested that, in lieu of new rules to 

require greater information disclosure, 

AMS should consider dedicated 

producer education resources or 

outreach programs to raise producer 

awareness. 

AMS Response: AMS appreciates this 

commenter’s suggestion to further 

educate producers and will take this 

under consideration as additional 

support AMS may offer to producers. 

This rulemaking action clarifies that if 

regulated entities make omission of 

material information necessary to make 

a statement or representation not false 

or misleading (as defined in the rule) 

against a covered producer, such 

conduct amounts to deception and is a 

violation of the Act. The codification of 

these regulations stems from existing 

law that aims to prohibit deception in 

Act-regulated markets. The new 

regulations do not create any specific 

disclosure of information requirements. 

To the extent that regulated entities 

identify the need to provide additional 

information to producers, the facts and 

circumstances of the transaction will 

determine whether the information is in 

violation of the rule. AMS agrees that 

producer education and outreach are 

valuable to protecting producers and 

effectuating the purpose of the Act and 

intends to conduct more of such 

activities in the immediate term. AMS is 

making no changes to the regulations as 

proposed in response to this comment. 

VIII. Regulatory Analysis 

A. Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act (PRA) of 1995 (44 U.S.C. 

chapter 35), an agency may not conduct 

or sponsor, and a person is not required 

to respond to, a collection of 

information unless it displays a 

currently valid Office of Management 

and Budget (OMB) control number. This 

final rule includes a new collection of 

information contained in new 

§ 201.304(c), ‘‘Recordkeeping of 

compliance practices.’’ The proposed 

rule requested comment on the 

estimated recordkeeping burden. All 

comments received on this information 

collection are summarized and included 

in the final request for OMB approval. 

Under the final rule, there are no new 

regulatory text changes that would 

change the proposed rule costs and 

benefits analyses. The burden estimates 

under the final rule are updated to 

reflect the most recent data available, 

updates in regulated entity wages, and 

the number of regulated entities. The 

estimated burden for the recordkeeping 

requirement imposed by this final rule 

is as follows: 

OMB Number: 0581–NEW. 

Expiration Date of Approval: This is 

a NEW collection. 

Type of Request: Approval of a New 

Information Collection. 

Abstract: Section 201.304(c) will 

require live poultry dealers, swine 

contractors, and packers to retain all 

relevant records relating to their 

compliance with § 201.304(a) and (b) for 

no less than five years. This 

recordkeeping requirement is necessary 

to evaluate compliance with 

§ 201.304(a) and (b) and to facilitate 

investigations and enforcements based 

on producer and grower complaints. 

This recordkeeping requirement will 

bolster AMS’s ability to review the 

records of regulated entities during 

compliance reviews and investigations 

based on complaints of undue 

prejudices, unjust discrimination, and 

retaliation in the livestock and poultry 

industries in accordance with the 

purposes of the Act. Costs of 

recordkeeping include maintaining and 

updating records by regulated entities 

and will be discussed and quantified 

below. 

Live Poultry Dealer, Swine Contractor, 

and Packer Recordkeeping Costs 

Estimate of Burden: The burden for 

maintaining records for this information 

collection is estimated to average 4.25 

hours per respondent in the first year, 

and 3.50 hours annually thereafter. 

Respondents: Live poultry dealers, 

swine contractors, and packers. 

Estimated Number of Respondents: 

1,030. 

Estimated Total Annual Burden on 

Respondents: 4,377 hours in the first 

year and 3,605 hours annually 

thereafter. 

Information Collection and 

Recordkeeping Costs of § 201.304(c): 

Costs to comply with the recordkeeping 

are likely relatively low. This rule 

extends the disposal date of most 

records, if already kept, from 2 years to 

five years to promote efficient USDA 

monitoring efforts. For some records, 

the current disposal date is 1 year, 

which could be extended to five years 

under this rule if they are deemed 

relevant to showing compliance with 

this rule. Costs of recordkeeping include 

regulated entities maintaining and 

updating compliance records they 

already keep. From the perspective of 

the regulated entity, recordkeeping is a 

direct cost. Some smaller regulated 

entities that currently do not maintain 

records may voluntarily decide to 

develop formal policies, procedures, 

training, etc., to comply with the rule 

and will then have records to maintain. 

AMS expects the recordkeeping costs 

will be comprised of the time required 

by regulated entities to store and 

maintain records they already keep. 

AMS expects that the costs will be 

relatively small because some packers, 

live poultry dealers, and swine 

contractors may currently have few 

records concerning policies and 

procedures, staff training materials, 

materials informing covered producers 

regarding reporting mechanisms and 

protections, compliance testing, board 

of directors’ oversight materials, and the 

number and nature of complaints 

received related to unduly prejudicial 

and unjustly discriminatory treatment. 

Some firms might not have any records 

to store. Others already store the records 

and may have no new costs. 

The amount of time required to keep 

records was estimated by AMS subject 

matter experts. These experts were 

auditors and supervisors with many 

years of experience in AMS’s PSD 

conducting investigations and 

compliance reviews of regulated 

entities. AMS used the May 2022 U.S. 

Bureau of Labor Statistics (BLS) 

Occupational Employment and Wage 

Statistics for the time values in this 

analysis.248 BLS estimated an average 

hourly wage for general and operations 

managers in animal slaughtering and 

processing to be $61.24. The average 

hourly wage for lawyers in food 

manufacturing was $103.81. In applying 

the cost estimates, AMS marked-up the 

wages by 41.79 percent to account for 

fringe benefits. 

AMS expects that recordkeeping costs 

will be correlated with the size of the 

firms. AMS ranked packers, live poultry 

dealers, and swine contractors by size 

and grouped them into quartiles, 

estimating more recordkeeping time for 

the largest entities in the first quartile 

than for the smallest entities in the 

fourth quartile. The first quartile 

contains the largest 25 percent of 

entities, and the fourth quartile contains 

the smallest 25 percent of entities. AMS 

estimated that § 201.304(c) will require 

an average of 4.00 hours of 

administrative assistant time, 1.50 hours 

of time each from managers, attorneys, 

and information technology staff for 

packers, live poultry dealers, and swine 

contractors in the first quartile to setup 

and maintain the required records in the 


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16176 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

249 90 live poultry dealers × ($44.51 per hour 

admin. cost × (4 hours + 2 hours + 1.33 hours + 

.67 hours)) + ($86.83 per hour manger cost × (1.5 

hours + .75 hours + .5 hours + .25 hours)) + 

($147.19 legal cost × (1.5 hours + .75 hours + .5 

hours + .25 hours)) + ($93.68 information tech cost 

× (1.5 hours + .75 hours + .5 hours + .25 hours))/ 

4 = $30,132. 

250 575 swine contractors × ($44.51 per hour 

admin. cost × (4 hours + 2 hours + 1.33 hours + 

.67 hours)) + ($86.83 per hour manger cost × (1.5 

hours + .75 hours + .5 hours + .25 hours)) + 

($147.19 legal cost × (1.5 hours + .75 hours + .5 

hours + .25 hours)) + ($93.68 information tech cost 

× (1.5 hours + .75 hours + .5 hours + .25 hours))/ 

4 = $192,507. 

251 365 packers × ($44.51 per hour admin. cost × 

(4 hours + 2 hours + 1.33 hours + .67 hours)) + 

($86.83 per hour manger cost × (1.5 hours + .75 

hours + .5 hours + .25 hours)) + ($147.19 legal cost 

× (1.5 hours + .75 hours + .5 hours + .25 hours)) 

+ ($93.68 information tech cost × (1.5 hours + .75 

hours + .5 hours + .25 hours))/4 = $122,200. 

252 90 live poultry dealers × ($44.51 per hour 

admin. cost × (3 hours + 1.5 hours + 1 hours + .5 

hours)) + ($86.83 per hour manger cost × (1.5 hours 

+ .75 hours + .5 hours + .25 hours)) + ($147.19 legal 

cost × (1.5 hours + .75 hours + .5 hours + .25 hours)) 

+ $93.68 information tech cost × (1 hours + .5 hours 

+ .33 hours + .17 hours))/4 = $26,021. 

253 575 swine contractors × ($44.51 per hour 

admin. cost × (3 hours + 1.5 hours + 1 hours + .5 

hours)) + ($86.83 per hour manger cost × (1.5 hours 

+ .75 hours + .5 hours + .25 hours)) + ($147.19 legal 

cost × (1.5 hours + .75 hours + .5 hours + .25 hours)) 

+ $93.68 information tech cost × (1 hours + .5 hours 

+ .33 hours + .17 hours))/4 = $166,244. 

254 365 packers × ($44.51 per hour admin. cost × 

(3 hours + 1.5 hours + 1 hours + .5 hours)) + ($86.83 

per hour manger cost × (1.5 hours + .75 hours + .5 

hours + .25 hours)) + ($147.19 legal cost × (1.5 

hours + .75 hours + .5 hours + .25 hours)) + $93.68 

information tech cost × (1 hours + .5 hours + .33 

hours + .17 hours))/4 = $105,529. 

first year. AMS expects the packers, live 

poultry dealers, and swine contractors 

in the second quartile will require an 

average of 2.00 hours of administrative 

assistant time, 0.75 hours of time each 

from managers, attorneys, and 

information technology staff for first 

year costs. The third quartile will 

require 1.33 hours of administrative 

assistant time, 0.50 hours of time each 

from managers, attorneys, and 

information technology staff for first 

year costs, and the fourth quartile will 

require 0.67 hours of administrative 

assistant time, 0.25 hours of time each 

from managers, attorneys, and 

information technology staff. 

AMS also expects that packers, live 

poultry dealers, and swine contractors 

will incur continuing recordkeeping 

costs in each successive year. AMS 

estimated that § 201.304(c) will require 

an average of 3.00 hours of 

administrative assistant time, 1.50 hours 

of time each from managers, attorneys, 

and 1.00 hour of time from information 

technology staff for packers, live poultry 

dealers, and swine contractors in the 

first quartile to setup and maintain the 

required records in each succeeding 

year. AMS expects that packers, live 

poultry dealers, and swine contractors 

in the second quartile will require an 

average of 1.50 hours of administrative 

assistant time, 0.75 hours of time each 

from managers, attorneys, and 0.50 

hours of time from information 

technology staff in each succeeding 

year. The third quartile will require 1.00 

hour of administrative assistant time, 

0.50 hours of time each from managers, 

attorneys, and 0.33 hours of time from 

information technology staff in each 

succeeding year, and the fourth quartile 

will require 0.50 hours of administrative 

assistant time, 0.25 hours of time each 

from managers, and attorneys, and 0.17 

hours from information technology staff. 

Estimated first-year costs for 

recordkeeping requirements in 

§ 201.304(c) totaled $30,000 for live 

poultry dealers,249 $193,000 for swine 

contractors,250 and $122,000 for 

packers.251 Estimated yearly continuing 

costs for recordkeeping requirements in 

§ 201.304(c) totaled $26,000 for live 

poultry dealers,252 $166,000 for swine 

contractors,253 and $106,000 for 

packers.254

Breaking out costs by market, AMS 

expects recordkeeping requirements in 

§ 201.304(c) to cost beef packers $58,000 

in the first year and $50,000 in each 

following year. Section 201.304(c) will 

cost lamb packers $23,000 in the first 

year and $20,000 in successive years. 

Section 201.304(c) will cost pork 

packers $42,000, and it will cost swine 

contractors $193,000 for a total of 

$235,000 in the first year. Section 

201.304(c) will cost swine contractors 

$166,000 in successive years, and it will 

cost pork packers $36,000 for a total of 

$202,000 in successive years. 

B. Executive Orders 12866, 13563, and 

14094; Regulatory Impact Analysis; and 

the Regulatory Flexibility Act 

AMS prepared this assessment in 

compliance with the requirements of 

Executive Orders 12866, 13563, and 

14094. Executive Orders 12866 and 

13563 direct agencies to assess all costs 

and benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, 

reducing costs, harmonizing rules, and 

promoting flexibility. Executive Order 

14094 reaffirms, supplements, and 

updates Executive Order 12866 and 

further directs agencies to solicit and 

consider input from a wide range of 

affected and interested parties through a 

variety of means. 

This rulemaking has been determined 

to be significant for the purposes of E.O. 

12866 as amended by E.O. 14094 and, 

therefore, has been reviewed by OMB. 

As a required part of the regulatory 

process, AMS prepared an economic 

analysis of the costs and benefits of 

§§ 201.302, 201.304, 201.306, and 

201.390. 

This Regulatory Impact Analysis 

(RIA) presents an assessment of the 

anticipated benefits and costs from the 

rule including an assessment of 

regulatory alternatives: the status quo, 

the preferred alternative, and the small 

business exemption alternative. The 

Regulatory Flexibility Analysis (RFA) 

evaluates the effect of the rule on small 

businesses. 

This regulatory filing is comprised of 

definitions in § 201.302, specific 

prohibited discriminatory and unduly 

prejudicial practices in § 201.304, 

specific prohibited deceptive practices 

in § 201.306, and a statement of 

severability among the provisions in 

§ 201.390. The definitions in § 201.302 

of a covered producer, livestock 

producer, and regulated entity will 

apply to §§ 201.304 and 201.306, and 

the regulatory impacts of the definitions 

are captured in the regulatory impacts of 

§§ 201.304 and 201.306, which are 

highlighted in this analysis. 

The statement of severability in 

§ 201.390 has no quantified regulatory 

impact, as it only serves to ensure that 

if any provision of §§ 201.302, 201.304, 

or 201.306 is declared invalid or the 

applicability to any person or 

circumstance is invalid, the remainder 

of the provisions will remain valid. 

Under the final rule, there are no new 

regulatory text changes that would 

change the proposed rule costs and 

benefits of the regulatory analyses. The 

new information collection and 

recordkeeping requirements under the 

final rule are updated to reflect only the 

most recent data available, updates in 

regulated entity wages and number of 

regulated entities. 

The Need for the Rule: Market Failure 

in Livestock and Poultry Markets 

This section describes the need for the 

regulatory action, and how the 

regulatory action will meet this need. 

The structure of the livestock and 

poultry industries sets the stage for 

unjustly discriminatory and deceitful 

conduct by regulated entities. This rule 

aims to benefit covered producers by 

protecting their rights from these market 

harms. This regulatory action addresses 

market failure in the livestock and 


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255Sheep and turkeys exhibit similar increases in 

concentration between 1980 and 2020. 

256Wise, T.A., S.E. Trist. ‘‘Buyer Power in U.S. 

Hog Markets: A Critical Review of the Literature,’’ 

Tufts University, Global Development and 

Environment Institute (GDAE) Working Paper No. 

10–04, August 2010, available at https://

sites.tufts.edu/gdae/files/2020/03/10- 

04HogBuyerPower.pdf.TAbl (last accessed 8/9/ 

2022). 

257MacDonald, James M. ‘‘Technology, 

Organization, and Financial Performance in U.S. 

Broiler Production,’’ EIB–126, U.S. Department of 

Agriculture, Economic Research Service, June 2014. 

(In the 2011 Agricultural Resource Management 

Survey (ARMS), the mean distance from a grower 

to the integrator’s processing plant was 34 miles, 

and 90 percent of all birds were produced on farms 

within 60 miles of the plant.) 

258MacDonald, James M., and Nigel Key. ‘‘Market 

power in poultry production contracting? Evidence 

from a farm survey.’’ Journal of Agricultural and 

Applied Economics 44, no. 4 (2012): 477–490. 

poultry industries. This section will 

show how high levels of concentration, 

the prevalence of vertical contracting, 

asymmetry of information and the holdup problem together create an 

environment facilitating abusive 

conduct that this rule addresses and 

defines the need for this rule. 

Discriminatory practices are the 

exclusionary or adverse treatment 

which market concentration and vertical 

contracting makes possible and hard to 

avoid on the basis of a covered 

producer’s race, or other protected basis, 

and on the basis of actions that 

prejudice, disadvantage, inhibit market 

access, or are otherwise adverse 

compared to terms generally or 

ordinarily offered to similarly situation 

covered producers. This rule focuses on 

prohibiting regulated entities from 

wrongfully excluding producers from 

markets or denying those producers the 

full value of their products or services 

in those markets. It will then be shown 

how the livestock and poultry market 

structures help define the distribution of 

this rule’s costs and benefits. 

The Need for the Rule: Prevalence of 

Concentration and Contracting in Cattle, 

Hog, and Poultry Industries 

The rise of concentration and vertical 

contracts in livestock and poultry 

markets has increasingly created an 

environment that enables packers, 

swine contractors, and live poultry 

dealers to unjustly exclude many 

producers from, and otherwise 

undermine their economic 

opportunities in, the marketplace. This 

adverse treatment is a cost, or economic 

harm, to covered producers born from 

market exclusion and associated high 

search costs of finding alternative 

markets in concentrated markets 

coordinated with vertical contracts. 

Concentration in these markets has 

intensified over the past several decades 

and continues today. Concentration 

ratios are one metric to track the 

increasing share of slaughter of livestock 

and poultry in U.S. attributed to fewer 

packers and poultry integrators. Table 1 

in the Background section shows the 

level of concentration in the livestock 

and poultry slaughtering industries for 

1980–2020 using four-firm 

Concentration Ratios (CR4). The CR4 for 

steers and heifers was 36 percent in 

1980 and rose to 81 percent in 2020. 

That is, in 2020, the top four beef 

packers slaughtered 81 percent of the 

nation’s steers and heifers. The CR4 for 

hogs was 32 percent in 1980 and rose to 

64 in 2020, and the CR4 was 32 percent 

in 1980 for broilers and rose to 53 

percent in 2020.255

The data in Table 1 are estimates of 

CR4s at the national level; however, in 

practice, the relevant economic markets 

for livestock and poultry may be 

regional or local, where concentration 

may be higher than those at the national 

level. This is because of limits on how 

far live animals can be safely and 

efficiently transported. In particular, 

regional concentration is often higher 

than national concentration for hogs.256

Similarly, based on AMS’s experience 

conducting investigations and 

monitoring cattle markets, there are 

often only one or two cattle buyers in 

many local geographic markets, and 

very few sellers have the option of 

selling fed cattle to more than three or 

four packers. Likewise, even though 

poultry markets are the least 

concentrated of the four markets 

described above as measured by their 

national CR4s, relevant markets for 

poultry growing services are more 

localized than markets for fed cattle or 

hogs, and local concentration in poultry 

markets is often greater than the 

national concentration level. Thus, the 

current environment is one where 

producers have little choice in whom 

they do business with, resulting in an 

unequal distribution of bargaining 

power between parties. MacDonald and 

Key found that about one quarter of 

contract growers reported that there was 

just one live poultry dealer in their area, 

defined by a roughly 34-mile radius 

from their farm; another quarter 

reported two; another quarter reported 

three; and the rest reported four or 

more.257 Table 2 in the Background 

section 258 highlights this issue by using 

the Herfindahl-Hirschman Index (HHI) 

to show the limited ability of poultry 

growers to switch to different 

integrators. Similar to a CR4, HHI is an 

indicator of market concentration, with 

the index increasing as market shares 

across firms (packers) become more 

unequal or the number of these firms 

decrease. Markets with HHIs above 

2,500 are considered highly 

concentrated. Table 2 presented earlier 

from MacDonald showed that 88.4 

percent of growers face an integrator 

HHI of at least 2,500. As stated earlier, 

the data suggest that most contract 

broiler growers in the U.S. are thus in 

markets where the sellers have the 

potential for market power advantage. 

Livestock producers face similar market 

vulnerabilities as shown here for 

poultry growers given that livestock 

producers also face regional market 

concentration that is more concentrated 

than national data would indicate. 

Market concentration and the use of 

vertical contracts are interrelated; as 

such, growing, production, and 

marketing contracts feature prominently 

in the livestock and poultry industries. 

As outlined above, several provisions in 

§§ 201.304 and 201.306 will affect the 

process of contract formation, 

performance, termination, and any other 

action that a reasonable covered 

producer would find materially adverse 

for livestock, poultry, and meat grown 

or marketed. 

The type of contracting varies among 

cattle, hogs, and poultry. Broilers, the 

largest segment of poultry, are almost 

exclusively grown under production 

contracts, in which the live poultry 

dealers, a regulated entity, own the 

birds and provide poultry growers with 

feed and medication to raise and care 

for the birds until they reach the desired 

market size. Poultry growers provide the 

housing, the skill and labor, water, 

electricity, fuel, and provide for waste 

removal. Fed cattle marketing contracts 

typically take the form of marketing 

agreements. Hog production falls 

between these two extremes. 

As shown in Table 5 below, over 96 

percent of all broilers and over 42 

percent of all hogs are grown under 

contractual arrangements. Similar to 

poultry contracts, swine contractors 

typically own the slaughter hogs and 

sell the finished hogs to pork packers. 

The swine contractors typically provide 

feed and medication to the swine 

production contract growers who own 

the growing facilities and provide 

growing services. The following table 

shows that the percentage of contract 

growing arrangements by species has 

remained relatively stable between 2007 

and 2017. 


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259Agricultural Census, 2012 and 2017, available 

at https://www.nass.usda.gov/Publications/ 

AgCensus/2017/Full_Report/Volume_1,_Chapter_1_

US/usv1.pdf (last accessed 8/9/2022). 

260U.S. Department of Agriculture, Agricultural 

Marketing Service, available at: https://

mpr.datamart.ams.usda.gov/ 

menu.do?path=Products\Cattle\Weekly%20Cattle 

(last accessed Aug. 2022). 

Other types of contracts include 

marketing agreements and forward 

contracts. Under marketing agreements 

and forward contracts, producers and 

packers agree to terms on a future sale 

and purchase of livestock. These types 

of agreements and contracts are 

commonly referred to as AMAs. Pricing 

mechanisms vary across AMAs. Some 

AMAs rely on a reported spot, or 

negotiated, market price or exchangebased futures price for at least one 

aspect of its price, while others involve 

complicated pricing formulas with 

premiums and discounts based on 

carcass merits. The livestock producer 

and packer agree on a pricing 

mechanism under AMAs, but usually 

not on a specific price. 

AMS reports the number of cattle sold 

to packers under formula, forward 

contract, and negotiated pricing 

mechanisms. Table 6 illustrates the 

prevalence of contracting in the 

marketing of fed cattle. Formula pricing 

methods and forward contracts are two 

forms of AMA contracts. Thus, the first 

two columns in the following table are 

cattle marketed under contract and the 

third column represents the spot 

market, or negotiated market, for fed 

cattle including negotiated grid. The 

data in the below table show that the 

AMA contracting of cattle has increased 

since 2010. Approximately 55 percent of 

fed cattle were marketed under 

contracts in 2010 (formula and forward 

contracts in the below table). By 2021, 

the percentage of fed cattle marketed to 

packers under AMA contracts had 

increased to just over 72 percent. These 

data also show the declines in the 

percentage of cattle sold on the spot 

market, or negotiated trades, from 46 in 

2010 to 28 in 2021. 

As previously discussed, and 

illustrated in Table 5 above, over 40 

percent of hogs are grown under 

production contracts. These hogs are 

then sold by swine contractors to 

packers. The percentage of hogs sold 

under marketing contracts or produced 

by packers has increased to over 98 

percent in 2020 (other marketing 

agreements and formula sales in the 

table below). The spot market, or 

negotiated trades, for hogs has declined 

from 5.2 percent in 2010 to 1.5 percent 

in 2020. As these data demonstrate, 

almost all hogs are marketed to packers 

under some type of marketing contract. 


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Table 5: Percentage of Poultry and Hogs Raised and Delivered Under 

Production Contracts259 

Species 2007 2012 2017 

Broilers 96.5 96.4 96.3 

Turkeys 67.7 68.5 69.5 

Hogs 43.3 43.5 42.4 

Table 6: Percentage of Fed Cattle Sold by Type of Purchase260 

Year Formula Forward Contract Negotiated 

2010 44.9 9.5 45.6 

2011 48.4 10.9 40.7 

2012 54.7 11.4 33.8 

2013 60.0 10.2 29.8 

2014 58.1 14.2 27.6 

2015 58.2 16.5 25.3 

2016 58.2 12.0 29.8 

2017 58.7 11.4 29.9 

2018 62.0 8.8 29.2 

2019 65.7 9.8 24.4 

2020 64.1 9.0 27.0 

2021 61.5 10.9 27.6 
Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 16179 

261U.S. Department of Agriculture, Agricultural 

Marketing Service, available at: https://

mpr.datamart.ams.usda.gov/ 

menu.do?path=\Products (Last accessed Aug. 

2022). 

262 Includes Packer Owned and Packer Sold, and 

Other Purchase Arrangements. 

263 Includes Swine Pork Market Formula, and 

Other Market Formula. 

264RTI International, 2007, GIPSA Livestock and 

Meat Marketing Study, Prepared for USDA, GIPSA; 

Stephen R. Koontz, ‘‘Another Look at Alternative 

Marketing Arrangement Use by the Cattle and Beef 

Industry,’’ in Bart Fischer et al, ‘‘The U.S. Beef 

Supply Chain: Issues and Challenges Proceedings of 

a Workshop on Cattle Markets,’’. 

265Nathan H. Miller, et al., ‘‘Buyer Power in the 

Beef Packing Industry: An Update on Research in 

Progress,’’ April 13, 2022, available at http://

www.nathanhmiller.org/cattlemarkets.pdf. 

266See Vukina and Leegomonchai, ‘‘Oligopsony 

Power, Asset Specificity, and Hold-Up: Evidence 

from The Broiler Industry,’’ American Journal of 

Agricultural Economics, 88(3): 589–605 (August 

2006). 

The Need for the Rule: Structural Issues 

in the Cattle, Hog, and Poultry 

Industries 

The livestock and poultry industries 

are characterized by a high volume of 

growing, production, and marketing 

contracts. When coupled with high 

levels of market concentration, this 

market environment can make it easier 

for regulated entities to engage in undue 

prejudice and unjust discrimination, 

retaliation, and deception and make the 

harms to producers greater from those 

abuses. 

Despite various policy and public 

concerns, contracting, growing, 

production, and marketing contracts can 

offer certain benefits to the contracting 

parties. Properly tailored, benefits can 

include helping farmers, livestock 

producers, and processors manage price 

and production risks, elicit the 

production of products with specific 

quality attributes by tying prices to 

those attributes, and facilitate the 

smooth flow of commodities to 

processing plants. Such attributes may 

encourage certain efficiencies in use of 

farm and processing capacities. Qualityrelated attributes and standards can 

incentivize farmers to deliver products 

that consumers desire and produce 

products in ways that reduce processing 

costs.264

There are, however, trade-offs with 

the use of these contracts. In 

concentrated industries, like the cattle, 

hog, and poultry industries, where 

market power is present, these types of 

contracts may result in increased 

opportunities for undue prejudices and 

unjust discrimination, retaliation, and 

deception, among other concerns, which 

cause inefficiencies in the markets for 

livestock, poultry, and meat.265

Heightened market concentration 

implies that livestock producers and 

poultry growers face fewer marketing 

and contract options compared to less 

concentrated markets. Livestock 

producers and poultry growers may find 

themselves in a take-it-or-leave it 

situation when a new or renewal 

contract is presented due to a limited 

number of packers and live poultry 

dealers with which to contract. Thus, 

livestock producers and poultry dealers 

entering into new, or renewal contracts 

may be taken advantage of through 

discriminatory, deceptive, or retaliatory 

practices. 

Livestock and poultry contracts may 

lead to unjust, prejudicial, and 

retaliatory practices. For example, a 

contract that limits a poultry grower’s 

services to a single integrator, even if 

the contract provides for fair 

compensation to the grower, still leaves 

the grower subject to risks. The grower 

faces the risk that the contractor may 

require additional capital investments 

or the contractor may impose lower 

returns at the time of contract renewal— 

leveraging its market power given the 

grower’s limited options.266 Some 

poultry make substantial long-term 

capital investments as part of livestock 

or poultry production contracts, 

including land, poultry or hog houses, 

and equipment. Those investments may 

bind the grower to a single contractor or 

integrator, furthering the indebtedness 

and exacerbating an imbalance of 

power. 

In the poultry industry, limited 

integrator choice may accentuate 

contract risks. The data in Table 2 above 

show that 52 percent of broiler growers, 

who account for 56 percent of total 

production, report having only one or 

two integrators in their local areas. Even 

where multiple integrators are present, 

there are high costs to switching, owing 

to the differences in technical 

specifications that integrators require. 

The growers likely need to invest in 

new equipment and learn to apply 

different operational techniques due to 

different breeds, target weights, and 

grow-out cycles. 

A 2006 survey indicated that growers 

with access to a single integrator 

received seven to eight percent less 


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Table 7: Percentage of Hogs Sold by Type of Purchase261 

Other Marketing 

Year Arrane;ements262 Formula263 N ee;otiated 

2010 45.4 49.4 5.2 

2011 47.6 48.2 4.2 

2012 47.7 48.6 3.6 

2013 48.3 48.4 3.2 

2014 45.9 51.4 2.7 

2015 46.0 51.4 2.6 

2016 50.0 47.6 2.5 

2017 52.5 45.0 2.5 

2018 56.5 41.3 2.2 

2019 59.8 38.4 1.8 

2020 61.3 37.1 1.5 
16180 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

267MacDonald, J. and N. Key. ‘‘Market Power in 

Poultry Production Contracting? Evidence from a 

Farm Survey.’’ Journal of Agricultural and Applied 

Economics. 44(4) (November 2012): 477–490. 

268See, e.g., Williamson, Oliver E. ‘‘Markets and 

Hierarchies: Analysis and Antitrust Implications,’’ 

New York: The Free Press (1975); Edlin, Aaron S. 

& Stefan Reichelstein (1996) ‘‘Holdups, Standard 

Breach Remedies, and Optimal Investment,’’ The 

American Economic Review 86(3): 478–501 (June 

1996). 

269MacDonald, J.M. ‘‘Trends in Agricultural 

Contracts.’’ Choices. 2015. Quarter 3. Available at 

https://www.choicesmagazine.org/choicesmagazine/theme-articles/current-issues-inagricultural-contracts/trends-in-agriculturalcontracts, accessed 9–19–22. 

270USDA, AMS, FTPP, Packers and Stockyards 

Division. Packer Annual Reports, 2021 and 2012. 

Available at https://www.ams.usda.gov/reports/psdannual-reports, accessed 9–19–22. 

271USDA, AMS, FTPP, Packers and Stockyards 

Division. Packer Annual Reports, 2021 and 2022 

pending, and 2012. Available at https://

www.ams.usda.gov/reports/psd-annual-reports, 

accessed 9–19–22. 

272For additional discussion see MacDonald, J.M. 

2016 ‘‘Concentration, contracting, and competition 

policy in U.S. agribusiness,’’ Competition Law 

Review, No. 1–2016: 3–8. 

273Transparency in Poultry Grower Contracting 

and Tournaments. A Rule by the Agricultural 

Marketing Service on 11/28/2023. https://

www.federalregister.gov/documents/2023/11/28/ 

2023-24922/transparency-in-poultry-growercontracting-and-tournaments. 

274All live poultry dealers are required to 

annually file Packers and Stockyards Division (PSD) 

form 3002 ‘‘Annual Report of Live Poultry Dealers,’’ 

OMB control number 0581–0308. The annual report 

form is available to public on the internet at https:// 

www.ams.usda.gov/sites/default/files/media/ 

PSP3002.pdf. 

compensation, on average, than farmers 

located in areas with four or more 

integrators.267 If live poultry dealers 

already possess some market power to 

reduce prices for poultry growing 

services, some contracts can extend that 

power by raising the costs of entry for 

new competitors or allowing for price 

discrimination.268

In 2013, production contracts covered 

$58 billion in agricultural production, 

83 percent of which was poultry and 

hog contracts.269 Most hogs are 

produced and marketed under 

production and marketing contracts. 

Open market negotiated trade 

represented nine percent of total trades 

for hogs in 2008 and dropped to two 

percent in 2020.270 In effect, the only 

production or marketing choice for a 

hog producer is to enter a contract. 

In the cattle sector, cow-calf 

operations incur a significant 

investment in breeding stock and 

typically sell steers and heifers once a 

year. Access to competitive markets, 

absent from unjust discrimination, 

undue prejudice, and retaliation, is 

important to the economic livelihood of 

the market. Reduced marketing 

options—fewer options to sell on the 

spot market, or lack of access to 

contracts—can leave producers 

susceptible to unfair trade practices. 

Spot market trades, or negotiated trades, 

as opposed to marketing agreements or 

contracts, for fed cattle accounted for 51 

percent of all trades in 2008 and fell to 

29 percent in 2022.271

One indication of potential market 

power is industry concentration.272

Market concentration facilitates the 

exclusionary and adverse treatment 

observed in discriminatory practices. 

The data in Table 1 are estimates of 

national four-firm concentration ratios 

at the national level, but the relevant 

economic markets for livestock and 

poultry may be regional or local, and 

concentration in the relevant market 

may be higher than the national level. 

For example, while poultry markets may 

appear to be the least concentrated in 

terms of the four-firm concentration 

ratios presented above, relevant 

economic markets for poultry growing 

services are more localized than markets 

for fed cattle or hogs, and local 

concentration in poultry markets is 

often greater than in hog and other 

livestock markets. The data presented 

earlier in Table 2 highlights this issue 

by showing the limited ability a poultry 

grower has to switch to a different 

integrator. As a result, national 

concentration may not demonstrate 

accurately the options poultry growers 

in a particular region face. 

The levels of industry concentration 

shown in Tables 1 and 2 may contribute 

to oligopolistic market power and 

asymmetric information. The result is 

that the contracts bargained between the 

parties may leave livestock producers, 

swine production contract growers, and 

poultry growers vulnerable to 

anticompetitive conduct such as undue 

prejudice and unjust discrimination, 

retaliation, and deception. 

The Need for the Rule: Asymmetric 

Information 

There is asymmetry in the 

information available to livestock 

producers and livestock and poultry 

growers as compared to the packers, 

swine contractors, and live poultry 

dealers with whom they contract. The 

larger packers, swine contractors, and 

live poultry dealers generally have more 

information (costs of production, input 

quality, and consumer demand, for 

example) that is useful in contracting 

than the smaller livestock producers 

and livestock and poultry growers. This 

asymmetry of information can lead to 

deceptive practices by regulated entities 

with superior information in contract 

formation, performance, termination, or 

refusal by employing a false or 

misleading statement, or omission of 

material information necessary to make 

a statement not false or misleading. A 

2023 AMS rule, Transparency in Poultry 

Grower Contracting and Tournaments, 

directly aims to address this asymmetric 

information in the poultry industry by 

adding disclosures and information that 

live poultry dealers engaged in the 

production of broilers must furnish to 

poultry growers with whom dealers 

make poultry growing arrangements.273

There remains a wide range of 

circumstances where information 

asymmetry is present in the livestock 

and poultry markets, which would be 

addressed in whole or in part by this 

final rule. Additionally, the information 

this rule provides can help producers 

know if they are treated unfairly. 

Some marketing contracts for fed 

cattle, for example, use various plant 

averages in the calculation for the base 

price of the cattle in the marketing 

contract. Only the packer has the 

information about the plant averages 

and producers cannot independently 

verify the information. Similar issues 

exist in hog marketing contracts. For 

contracts based on the pork cutout, the 

hog packer has more information about 

the direct retail pork demand and hence 

pork cutout prices than hog sellers. 

Live poultry dealers hold information 

on how individual poultry growers 

perform under a variety of contracts. 

The average number of contracts for the 

live poultry dealers filing annual reports 

with AMS in 2020 was 251. The largest 

live poultry dealers contracted with 

several thousand growers.274

Most growers producing poultry 

under production contracts are paid 

under a poultry grower ranking or 

‘‘tournament’’ pay system. Under 

tournament systems, the contract 

between the poultry grower and the 

company for whom the grower raises 

poultry for slaughter pays the grower 

based on a grouping, ranking, or 

comparison of poultry growers 

delivering poultry to the same company 

during a specified period. Generally, 

live poultry dealers provide most of the 

inputs to all the growers in each poultry 

tournament used to determine grower 

pay. In these tournaments, the live 

poultry dealers have information about 

the quality of the inputs, while each 

grower only knows what he or she can 

observe. A grower may not be able to 

evaluate the inputs it received such as 

chicks and feed, and he or she almost 

certainly will not know about the inputs 

received by other growers. A live 

poultry dealer also has historical 

information concerning growers’ 

production and income under many 


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Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 16181 

275See sec. 6(a)(3)(C), E.O. 12866. 

276This final rule includes § 201.302, which 

defines a covered producer, livestock producer, and 

regulated entity. These definitions will apply to 

final §§ 201.304 and 201.306. The definitions final 

in § 201.302 are captured in the regulatory impacts 

of final §§ 201.304 and 201.306. The final rule also 

includes § 201.390 which states all provisions are 

severable in case any provision is declared invalid. 

different circumstances for all the 

growers with which the dealer 

contracts, while an individual grower, 

like most other producers, only has 

information concerning his or her own 

production and income. Prohibiting 

deception may serve to reduce the 

negative impacts from asymmetric 

information. Prohibiting retaliation 

against producers or growers because 

they joined a cooperative or grower 

association organization, shared 

information to improve their production 

or growing practices with a regulated 

entity, another covered producer, or 

with a commercial entity, 

communicated with the government, or 

asserted any of the rights granted under 

the Act should lead to reducing the 

information asymmetry between 

regulated entities and producers. 

The Need for the Rule: Hold-Up 

Problem 

Hold-up is another problem that is 

particularly acute in service contracts 

between poultry growers and live 

poultry dealers. The economic concept 

of a hold-up problem refers to a 

situation in which two parties may be 

unable to cooperate efficiently due to 

incomplete or asymmetric information 

and the inability to write, enforce, or 

commit to contracts. Once a party 

becomes locked into a transaction, 

especially as a result of making a 

transaction-specific investment, they 

become vulnerable to exploitation by 

the other party. This may involve one 

party to a contract opportunistically 

deviating from expectations of the other 

party or failing to live up to previously 

agreed upon terms. 

In the poultry industry, hold-up 

occurs when a poultry grower makes an 

investment, such as in poultry housing, 

and becomes dependent upon the 

growing arrangement to repay the 

investment. Hold-up is less common for 

hog and cattle producers, so the 

discussion here is limited to poultry 

growing to highlight this risk to poultry 

growers. Substantial gaps exist between 

the periods of time covered by the 

contract and the mortgage on poultry 

housing, creating uncertainty around 

whether growers will be able to repay 

their debt and recoup their investments, 

introducing the potential for hold-up 

into the contracting process. If the 

integrator takes advantage of the 

grower’s dependence, for example, by 

delaying delivery of chicks that the 

grower depends upon to make payments 

on investments, it would be holding up 

the grower. The aim of the economic 

hold-up may be to coerce the grower 

into accepting conditions that benefit 

the integrator at the expense of the 

grower. For example, refusing to supply 

chicks until a contract amendment with 

unfavorable conditions is signed. 

This is of concern in poultry 

production contracts because the capital 

investment requirements related to 

growing chickens are significant and 

highly specialized (that is, they have 

little value outside of growing 

chickens). As a result, growers entering 

the market are tied to growing chickens 

to pay off the financing of the capital 

investment. Growers have reported that 

they must accept unfavorable contract 

terms or endure unfavorable treatment 

during a contract—including 

inappropriate limits on their ability to 

form associations, assert their rights 

under the law or contract (such as 

viewing the weighing of broilers), 

communicate with government entities, 

and seek alternative business 

relationships—because they are tied to 

production to pay off lenders and they 

have few, if any, alternative integrators 

with whom they can contract. Hog 

producers, which invest heavily in 

production facilities, may face similar 

risks. 

Long term, this behavior may result in 

underinvestment in production, which 

is inefficient. Alternatively, if growers 

make a significant investment because 

they do not anticipate hold-up, but then 

it does occur, then growers may be 

required to spend too much on 

investments. The resulting overinvestment in capital by those growers 

facing hold-up is also inefficient. The 

hold-up problem is a manifestation of 

both market power and asymmetric 

information. 

Summary Need for the Rule: 

Contracting, Industry Structure, and 

Market Failure 

As described previously, the 

organization and structure of poultry 

and livestock markets is characterized 

by regional market power; substantial 

investment in production capital that is 

specific to a single production purpose; 

and, in the poultry industry, nearly 

universal use of production contracts, 

and widespread use of marketing 

contracts in the cattle industry, while 

less so, for hogs. These conditions create 

the potential for market failures. 

Asymmetric information and imperfect 

competition are concerns in livestock 

and poultry markets. economically 

incomplete contracts and hold-up are of 

particular concern in poultry markets 

and can exacerbate the risk of undue 

prejudice and unjust discrimination, 

retaliation, and deception in poultry 

and livestock markets. 

By setting forth specific prohibitions 

on unduly prejudicial and unjustly 

discriminatory and deceptive practices, 

the rule will reinforce producers’ 

existing rights to gather and share 

information, while reducing the fear of 

retaliation and interference in the 

contracting process. The prohibitions in 

the rule will also continue to support, 

and possibly promote more efficient and 

equitable information access, reduce the 

hold-up problem, reduce retaliation, 

discourage false and misleading 

statements, and increase 

communication, cooperation, and 

retention of legal rights. The 

prohibitions specified in §§ 201.304 and 

201.306 will ultimately assist in 

mitigating the impacts of imperfect 

competition. 

Cost-Benefit Analysis of §§ 201.304 and 

201.306 

Regulatory Alternatives Considered 

Executive Order 12866 requires an 

assessment of costs and benefits of 

potentially effective and reasonably 

feasible alternatives to the planned 

regulations and an explanation of why 

the planned regulatory action is 

preferable to the potential 

alternatives.275 AMS considered three 

regulatory alternatives. The first 

alternative that AMS considered is to 

maintain the status quo and not propose 

§§ 201.304 and 201.306. The second 

alternative that AMS considered is to 

issue §§ 201.304 and 201.306 as 

presented in this rule.276 This second 

alternative is AMS’s preferred 

alternative as will be explained below. 

The third alternative that AMS 

considered is proposing §§ 201.304 and 

201.306, but exempting small 

businesses, as defined by the Small 

Business Administration (SBA), from 

having to comply with the 

recordkeeping requirement of 

§ 201.304(c). 

Regulatory Alternative 1: Status Quo 

Alternative 

If §§ 201.304 and 201.306 are never 

promulgated, there are no marginal 

costs and marginal benefits as industry 

participants will not alter their conduct. 

From a cost standpoint, this Status Quo 

Alternative is the least-cost alternative 

compared to the other two alternatives. 

This alternative also has no marginal 

benefits. Since there are no changes 

from the status quo under this 


ddrumheller on DSK120RN23PROD with RULES2
16182 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

regulatory alternative, it will serve as 

the baseline against which to measure 

the other two alternatives. 

Final Rule 

As discussed above, final § 201.304 

prohibits undue prejudice, unjust 

discrimination, and retaliation by 

regulated entities and adds a 

requirement for regulated entities to 

maintain records that they already keep, 

for up to a period of five years, related 

to its compliance with final § 201.304. 

Section 201.306 will prohibit deceptive 

practices by regulated entities in 

contract formation, performance, or 

termination by employing a false or 

misleading statement, or omission of 

material information necessary to make 

a statement not false or misleading. 

Additionally, a regulated entity may not 

refuse a contract by providing false or 

misleading information to a covered 

producer or associations of covered 

producers. 

Final Rule: Benefits 

Reductions in prejudicial, 

discriminatory, retaliatory, and 

deceptive practices by packers, swine 

contractors, and live poultry dealers 

will benefit society. These types of 

conduct are inefficient, and often 

difficult to quantify for prejudicial, 

discriminatory, retaliatory, and 

deceptive practices are not necessarily 

written into contracts but in contract 

offers, preparation and enforcement. 

Production contracts need not change to 

realize benefits in this rule. The amount 

of benefits that depends on the extent to 

which the rule reduces prejudicial, 

discriminatory, retaliatory, and 

deceptive practices. That, in turn, is 

bounded by the degree to which any of 

these types of activities are occurring in 

the baseline. If the reductions are small, 

the benefits will be small. The greater 

the reductions, the greater the potential 

benefits. USDA’s long-standing policy 

has been that the Act prohibits the type 

of conduct that final §§ 201.304 and 

201.306 addresses. 

Final §§ 201.304 and 201.306 add 

specificity to what constitutes undue 

prejudices, unjustly discriminatory 

practices, retaliation, and deception. 

The size of the benefits is difficult to 

quantify as it depends on the amount of 

undue prejudice, unjust discrimination 

and deception that will be avoided due 

to added specificity provided by the 

rule. The added benefits to the industry 

from final §§ 201.304 and 201.306 over 

the Status Quo occur when packers, 

swine contractors, and live poultry 

dealers alter their conduct to reduce 

instances of deceptive, prejudicial, and 

discriminatory practices, including 

retaliation. The potential benefits 

include protecting producer and grower 

rights, improved corporate culture, 

improved information, fewer deceptive 

practices, among others. The more 

undue prejudice, unjust discrimination, 

retaliation, and deception that will be 

avoided, the larger the benefits. AMS is 

unable to quantify the benefits and will 

present a qualitative discussion of the 

types of potential benefits that accrue 

from reductions in undue prejudice, 

unjust discrimination, retaliation, and 

deception. 

Benefits: Protecting Producer and 

Grower Rights 

A key purpose of specifying certain 

prohibitions on unduly prejudicial, 

discriminatory, and deceptive practices, 

including those in final §§ 201.304 and 

201.306, is to protect livestock 

producers, swine contractors and 

poultry growers’ rights under the Act. 

Final §§ 201.304 and 201.306 will also 

help protect producers from unfair and 

deceptive practices stemming from 

market power imbalances such as undue 

prejudice, unjust discrimination, 

retaliation, and deception by using false 

or misleading statements in contracting 

by packers and live poultry dealers. The 

benefits of prohibiting prejudicial, 

discriminatory, and deceptive practices, 

will accrue not only to the market’s 

covered producers and cooperative 

producers who have been subjected to 

the prohibited practices, but also to 

those for whom the rule’s deterrence 

effects will protect from future potential 

abuses. 

Benefits: Addressing Imperfect 

Information 

Several provisions in the final rule 

will enhance the protection of the rights 

of producers to lawfully communicate 

and to associate with others to explore 

business relationships and improve 

production practices and in the 

marketing of livestock, poultry, and 

meat. These provisions will benefit 

producers by encouraging the use of 

their currently existing legal rights that 

will solidify and enhance their access to 

information. This in turn will help 

address information asymmetry and 

thus help producers make better 

business decisions, enhance their 

competitiveness, reduce the hold-up 

problem, and promote innovation and 

economic efficiency in the industry. 

The final rule will help close this 

information gap by protecting the rights 

of producers to form associations and 

communicate freely with one another, 

and to communicate with other 

regulated entities for the purpose of 

exploring a business relationship. This 

will benefit producers by improving 

their ability to strengthen the returns to 

their livestock and poultry investments, 

by enhancing the bargaining power of 

supplier groups if they elect to organize 

in such a way. 

This rule will prohibit retaliation 

against covered producers due to their 

communicating, negotiating, or 

contracting with other covered 

producers, a commercial entity, 

consultant, or regulated entities, which 

could increase the important decisionmaking information available to 

producers. Improved safeguarding of 

protected activities may enable the 

producer to improve business decisionmaking and manage risk, including 

potentially acquiring external insurance 

and risk-management products. In 

addition, facilitating producers’ ability 

to gain more and better information will 

help correct information asymmetry and 

improve transparency and completeness 

in contracts. 

More information will also reduce the 

risks associated with hold-up as 

discussed above. By protecting rights to 

freely communicate and associate, this 

rule will facilitate communication 

across the industry that may help 

disseminate information regarding new 

innovations and best practices within 

the industry. These types of provisions 

that could provide producers with 

access to more and better information 

should promote innovation and 

economic efficiency in the industry. 

The final rule may also serve to 

reduce the risk of violating sec. 202(a) 

of the Act because it will provide 

clarification to the livestock, and 

poultry industries as to the 

discriminatory and deceptive practices 

that will be prohibited under that 

section of the Act. Less risk through the 

clarification provided in the final rule 

will likely foster fairness in contracting 

by providing explicit protections for 

livestock producers, swine production 

contract growers, and poultry growers. 

Benefits: Prohibiting Deceptive Practices 

Final § 201.306 specifies prohibited 

practices that will be considered 

deceptive, and thus in violation of sec. 

202(a) of the Act. Though USDA already 

protects producers from deceptive 

practices, the rule will explicitly protect 

suppliers from deception by packers 

and live poultry dealers by employing a 

false and misleading statement, or 

omission of material information 

necessary to make a statement not false 

or misleading in contracting. Prohibited 

deceptions, including false statements 

or omissions, can prevent or mislead 

producers, sellers, or buyers from 

making informed decisions and thus 


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Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 16183 

277Title II of the Unfunded Mandates Reform Act 

of 1995 (UMRA, Pub. L. 104–4) requires Federal 

agencies to assess the effects of their regulatory 

actions on State, local, and Tribal Governments and 

on the private sector. Agencies generally must 

prepare a written statement, including cost benefits 

analysis, for proposed and final rules with ‘‘Federal 

mandates’’ that may result in expenditures of $100 

million or more (adjusted for inflation) in any 1 

year for State, local or Tribal governments, in the 

aggregate, or to the private sector. Congressional 

Research Service. Updated February 23, 2021. 

Unfunded Mandates Reform Act: History, Impact, 

and Issues. Accessed at https://

crsreports.congress.gov/product/pdf/R/R40957/109 

on 02/08/2024. 

278 Data for negotiated steers and heifers, across 

all Choice cattle, four cattle regions, 2015–2023. 

Sources: U.S. Department of Agriculture, 

Agricultural Marketing Service. Texas-OklahomaNew Mexico Weekly Direct Slaughter Cattle— 

Negotiated Purchases (LM_CT156), Kansas Weekly 

Direct Slaughter Cattle—Negotiated Purchases (LM_

CT157), Nebraska Weekly Direct Slaughter cattle— 

Negotiated Purchases (LM_CT158), and Iowa/ 

Minnesota Weekly Weighted Average Cattle 

Report—Negotiated (LM_CT167). 

279 13 billion lbs. = UMRA $170 million threshold 

divided by $0.01 per lb. (difference between the 

minimum and average liveweight prices paid for 

cattle over the last nine years in eight cattle markets 

is $1.31 per cwt ($.01/lb.)). 

280U.S. Department of Agriculture, National 

Agricultural Statistical Service. April 2023. 

Livestock Slaughter 2022 Summary. Accessed at 

https://downloads.usda.library.cornell.edu/usdaesmis/files/r207tp32d/8p58qs65g/g445dv089/ 

lsan0423.pdf on 02/08/2024. 

281 9.5 million head of cattle = 13 million lbs. of 

cattle divided by 1,369 lbs. per head. 

282 28 percent = (9,479,254 head divided by 

34,300,00 head annual slaughter) multiplied by 100. 

represents a market inefficiency. The 

provisions in final §§ 201.304 and 

201.306 will help give producers 

confidence that the information 

provided by processors is reliable, 

which will help them to make better 

and more informed business decisions 

and manage risk. 

Other Benefits 

While some of these protections 

already benefit individual producers, 

ensuring they cover the full marketplace 

and can be enforced individually adds 

to the integrity and fairness of livestock 

and poultry contracting. Specifying 

these protections may bring additional 

benefits above the Status Quo 

Alternative. 

Production and marketing contracting 

has many benefits in the livestock and 

poultry industries. The final rule can 

further enhance the documented 

benefits of contracting by prohibiting 

unduly prejudicial, discriminatory, and 

deceptive practices. Livestock producers 

often have few choices of packers to 

which they sell, and poultry growers 

often have few choices in the live 

poultry dealers for which they raise 

poultry. The limited alternatives cause 

fear among producers that certain 

actions they might undertake, such as 

communication with government or 

other regulated entities to pursue 

business relationships, association with 

certain groups, or making lawful public 

complaints about the packers, swine 

contractors, or live poultry dealers 

might result in harmful retaliations. 

AMS intends the final rule to promote 

integrity to the marketplace by 

enhancing the protection of the rights of 

the producers and alleviating those 

fears. 

The literature and data on these topics 

are not sufficient to allow AMS to 

estimate the magnitude of the 

inefficiencies that the final rule may 

correct above the Status Quo 

Alternative, nor the degree to which the 

additional producer and grower 

protections will address inefficiencies. 

Though AMS is unable to quantify the 

benefits of the regulation, this analysis 

has explained the types of benefits that 

will be derived from reductions in 

undue prejudice, unjust discrimination, 

retaliation, and deception. If the 

reductions are small, the benefits will be 

small. The greater the reductions, the 

greater the potential benefits. 

Final Rule: Costs 

The final rule will not impose any 

restrictions on numbers or types of 

production or marketing contracts that 

can be utilized, use of AMAs, poultry 

tournaments, or base price mechanisms 

in contracts for packers, swine 

contractors, and live poultry dealers. 

Instead, the final rule clarifies the 

prohibited unduly prejudicial, unjustly 

discriminatory, and deceptive practices 

that AMS considers violations of 

sections 202(a) and (b) of the Act. The 

final rule will require packers, live 

poultry dealers, and swine contractors 

to discontinue any prejudicial, unjustly 

discriminatory, or deceptive practices, if 

any are occurring. The practices 

prohibited by §§ 201.304 and 201.306 

are the kind of practices that do not 

benefit society as a whole, but there is 

uncertainty about the extent of net costs 

to regulated entities of preventing them 

since they are based on behaviors and 

are not expressly written into contracts. 

In other words, §§ 201.304 and 201.306 

result in uncertain-in-magnitude 

indirect costs resulting from 

adjustments by the livestock and 

poultry industries to reduce their use of 

AMAs, poultry tournaments, and 

pricing mechanisms, with the 

possibility of a number of changes to 

existing marketing or production 

contracts. 

Though the magnitude of indirect 

costs is uncertain, AMS has constructed 

a scenario that indicates the magnitude 

is likely below an established dollar 

value benchmark. The following 

scenario illustrates why it is extremely 

unlikely that the rule’s indirect costs 

will exceed the Unfunded Mandates 

Reform Act’s (UMRA) cost compliance 

threshold of $170 million annually, a 

benchmark used to assess this rule’s 

effects on the private sector.277 If some 

cattle contracts are altered to come into 

compliance with the rule, and cattle 

prices to some producers are increased, 

AMS expects that the packers will offer, 

at most, the average price paid for cattle. 

Looking just at cattle, the weighted 

average difference between the 

minimum and average liveweight prices 

paid for cattle over the last nine years 

in four cattle regions reported by AMS 

Market News is $1.31 per cwt ($.01/ 

lb.).278 If AMS assumes that the entire 

difference between the minimum and 

average prices paid was due to unlawful 

discrimination, deception, and 

retaliation, this will require 13 billion 

pounds of liveweight cattle to meet the 

$170 million threshold.279 This 

assumption does not account for any 

price differences for cattle related to 

quality of the animal. Taking the 2022 

average liveweight per head for all cattle 

of 1,369 lbs. per head,280 this means that 

9.5 million head of cattle in one year 

would have to face conduct this rule 

aims to prohibit to equal $170 million 

in costs in that year.281 This number 

accounts for 28 percent of all cattle 

slaughtered in 2022.282 Based on AMS’s 

knowledge of the livestock industry, it 

is not expected that the number of cattle 

affected by unlawful discrimination, 

retaliation, or deception reaches this 

level. This fact, combined with the 

unrealistic assumption that any price 

deduction below the average price does 

not account for quality differences and 

is wholly the result of discrimination, 

retaliation, and deception, points to a 

conclusion that this rule will have 

limited impacts, and not exceed the 

UMRA threshold. 

Litigation Costs 

AMS expects §§ 201.304 and 201.306 

to reduce litigation costs due to 

increased compliance with the rule 

associated with the clarity provided by 

the rule as to the conduct that violates 

the Act, but also to increase litigation as 

this rule allows producers to find relief 

in courts. AMS is uncertain as to which 

of these offsetting effects will dominate 

and to what extent. The final rule 

clarifies the prohibited unduly 

prejudicial, discriminatory, and 

deceptive practices that will violate 

section 202(a) of the Act. The 

clarification could result in a reduction 

in litigation costs if companies come 


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16184 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

into compliance without any 

enforcement action. These regulations 

encourage regulated entities to 

proactively avoid prejudicial, 

discriminatory, and deceptive practices 

that could otherwise lead to costly 

litigation. Further, some firms may 

develop policies and procedures to 

comply with the recordkeeping 

requirements. This effect could reduce 

litigation and thus result in reduced 

litigation costs for regulated entities. 

However, there are several provisions 

in § 201.304 that could result in 

additional litigation. AMS has received 

formal and informal complaints against 

packers, swine contractors, and live 

poultry dealers for retaliation for 

belonging to various producer and 

grower associations, contacting AMS to 

file a complaint, asserting legal rights, 

and contacting a competing regulated 

entity to pursue a contractual 

relationship. Similarly, there are several 

provisions in § 201.306 that could result 

in additional litigation, including 

refusals by regulated entities to enter 

into or renegotiate contracts and 

contract terminations by producers. The 

clarity of the practices that AMS 

considers to be discriminatory and 

deceptive in §§ 201.304 and 201.306 

could offer producers new hope for 

relief from courts for undue prejudicial, 

discriminatory, and deceptive practices 

by regulated entities. This effect could 

result in increased litigation. 

As stated above, AMS is uncertain as 

to which effect will dominate and to 

what extent. AMS does not estimate 

litigation costs in this analysis. 

Direct Costs of the Final Rule 

AMS expects §§ 201.304 and 201.306 

will result in direct administrative and 

recordkeeping costs to the industry. 

AMS expects that packers, swine 

contractors, and live poultry dealers 

will incur direct administrative costs of 

learning the rule and then reviewing 

and, if necessary, revising marketing 

and production contracts to ensure 

compliance with §§ 201.304 and 

201.306. Regulated entities will also 

incur recordkeeping costs from keeping 

the records they already maintain for up 

to five years as required under 

§ 201.304. The expected total costs of 

§§ 201.304 and 201.306 will be the 

direct administrative costs and 

recordkeeping costs of that regulatory 

alternative. The direct administrative 

costs and recordkeeping costs will be 

estimated below. 

Direct Administrative Costs of the Final 

Rule 

AMS expects that §§ 201.304 and 

201.306 will prompt packers, live 

poultry dealers, and swine contractors 

to first review and learn the rule and 

then review their procurement policies 

and production contracts and make any 

necessary changes to ensure compliance 

with the new regulations. Expected 

costs are estimated as the total value of 

the time required to review and learn 

the rule and then review and, if 

necessary, revise procurement and 

production contracts. 

AMS expects the direct administrative 

costs of complying with §§ 201.304 and 

201.306 will be relatively small. 

The certain types of benefits outlined 

above will be in proportion to the extent 

to which the rule reduces prejudicial, 

discriminatory, retaliatory, and 

deceptive practices. The USDA policy 

has long held that several of the 

provisions in §§ 201.304 and 201.306 or 

similar provisions were violations of the 

Act, although the position has not been 

established in regulations. 

Consequently, AMS expects packers, 

live poultry dealers, and swine 

contractors to make changes to 

relatively few contracts. 

The direct costs of the rule are low 

because the discriminatory, retaliatory, 

and deceptive behavior which the rule 

seeks to mitigate are not overtly written 

into the terms of the contracts between 

regulated entities and producers. They 

are behaviors or conduct in which some 

regulated entities engage, for example 

by not offering contracts to some 

producers due to discrimination and 

retaliation or by offering less favorable 

contract terms due to discrimination, 

retaliation, and deception. If the rule 

results in less discriminatory, 

retaliatory, or deceptive behavior by 

regulated entities, the costs of offering a 

contract to a producer or grower that 

was previously denied a contract or 

amending the terms of a less favorable 

contract to an impacted producer or 

grower will be of uncertain. Given that 

the behavior that the rule seeks to 

mitigate is not overtly written into 

contracts and is behavior during the 

contract offering process, the potential 

costs of mitigating the behavior are 

uncertain. The more that 

discriminatory, retaliatory, and 

deceptive behavior is mitigated because 

of the rule, the greater the benefits. AMS 

does not expect any changes in types of 

production and marketing contracts 

offered. AMS expects the same types of 

contracts to be offered, but with more 

equitable performance under the 

contracts by regulated entities across 

producers, fewer producers denied or 

terminated from contracts, and better 

clarity regarding contractual 

expectations. AMS also expects more 

contracts to be offered to producers who 

may not previously have been offered a 

contract due to discrimination, for 

example. Given its professional 

expertise based on regulating the 

industry and investigating complaints of 

the prohibited behaviors, AMS does not 

believe that the discriminatory, 

retaliatory, and deceptive behavior 

addressed by this rule is written into 

contract terms frequently enough to 

warrant changes to very many contracts. 

Although the amount of indirect costs 

is uncertain, AMS expects any indirect 

costs will likely range from marginal to 

modest. As shown above, AMS 

acknowledges that some regulated 

entities may offer higher prices to some 

livestock producers and growers when 

they come into compliance with this 

rule. This could shift livestock and 

poultry prices offered to some producers 

and growers toward the true value of 

their livestock or poultry that would 

prevail in a more competitive market 

and away from the artificially low prices 

offered through the abuse of market 

power by engaging in deception, 

discrimination, or retaliation. This 

would reduce the cost to society due to 

the market inefficiency (dead weight 

loss) created by discriminatory, 

retaliatory, and deceptive practices by 

some regulated entities. This shift in 

prices offered to some producers and 

growers toward their true value would 

result, in some instances, in a transfer 

of excess profits (profits that exceed 

those that would be earned in a more 

competitive market) from regulated 

entities to some growers and producers. 

This transfer from regulated entities to 

some producers and growers could 

occur. AMS cannot quantify the extent 

to which the behavior this rule aims to 

prohibit occurs in the industry or the 

extent of any harm that would be 

avoided by regulated entities’ cessation 

of the behavior under the clearer 

limitations set by this rule. AMS notes 

that regulated entities, in their 

comments to the proposed rule, asserted 

that the occurrence of the practices 

addressed in the rule are not 

widespread. Assuming this is true, the 

indirect costs will be marginal. AMS, 

however, has noted the behaviors have 

been sufficiently widespread to warrant 

the intervention provided by this final 

rule. 

Estimates of the amount of time 

required to review and learn the rule 

and to review and revise contracts and 

keep records were provided by AMS 

subject matter experts. These experts 

were auditors and supervisors with 

many years of experience in AMS’s PSD 

conducting investigations and 

compliance reviews of regulated 

entities. In May 2022, BLS released 


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Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 16185 

283Estimates are available at U.S. Bureau of Labor 

Statistics. Occupational Employment and Wage 

Statistics, available https://www.bls.gov/oes/ 

special-requests/oesm22all.zip (accessed 7/14/ 

2023). 

284Estimates are available at U.S. Bureau of Labor 

Statistics. Occupational Employment and Wage 

Statistics, available https://www.bls.gov/oes/ 

special-requests/oesm22all.zip (accessed 7/14/ 

2023). 

285For brevity, all beef and veal packers will be 

collectively referred to as beef packers and all lamb, 

sheep, and goat packers will be collectively referred 

to as lamb packers. 

286 90 live poultry dealers × $147.19 per hour × 

1 hour = $13,247. 

287 90 live poultry dealers × $86.83 per hour × 1 

hour = $7,815. 

288 $13,247 + $7,815 = $21,062. 

289 365 × ($147.19 per hour × 1 hour + $86.83 per 

hour × 1 hour) = $85,417. 

290 575 × ($147.19 per hour × 1 hour + $86.83 per 

hour × 1 hour) = $134,562. 

291 90 live poultry dealers × (($44.51 per hour 

admin. Cost × (4 hours + 2 hours + 1.33 hours + 

.67 hours)) + ($86.83 per hour manger cost × (1.5 

hours + .75 hours + .5 hours + .25 hours)) + 

($147.19 legal cost × (1.5 hours + .75 hours + .5 

hours + .25 hours)) + ($93.68 information tech cost 

Continued 

Occupational Employment and Wage 

Statistics that AMS used for the time 

values in this analysis.283 BLS estimated 

an average hourly wage for general and 

operations managers in animal 

slaughtering and processing to be 

$61.24. The average hourly wage for 

lawyers in food manufacturing was 

$103.81. In applying the cost estimates, 

AMS marked up the wages by 41.79 

percent to account for fringe benefits.284

AMS expects that each packer, swine 

contractor, and live poultry dealer will 

spend one hour of legal time and one 

hour of management time to review and 

learn the rule and then, if necessary, 

revise production and marketing 

contracts to ensure compliance with the 

rule. 

Live poultry dealers are currently 

required to file form PSD 3002, ‘‘Annual 

Report of Live Poultry Dealers,’’ OMB 

control number 0581–0308, with AMS. 

Ninety live poultry dealers filed annual 

reports with AMS for their 2021 fiscal 

year. 

Packers are currently required to file 

form PSD 3004, ‘‘Annual Report of 

Packers’’ OMB control number 0581– 

0308, with AMS. Among other things, 

each packer reports the number of head 

of cattle or calves, hogs, and lamb, 

sheep, or goats that it processed. Three 

hundred sixty-five packers that 

processed cattle or calves, hogs, or lamb, 

sheep or goats filed reports or were due 

to file a report with AMS for their fiscal 

year 2021. Two hundred sixty-one were 

beef or veal packers. One hundred 

ninety-six were pork packers, and 139 

were lamb, sheep, or goat packers.285

The number of beef, pork, and lamb 

packers do not sum to 365 because 

many firms slaughtered more than one 

species of livestock. For instance, 112 

packers slaughtered both beef and pork, 

and 66 slaughtered beef, pork, and lamb. 

AMS expects that packers processing 

more than one species of livestock will 

not incur additional costs for each 

species. That is, AMS expects that each 

packer will require one hour of 

attorney’s time and one hour of 

management time regardless of how 

many species of livestock it processes. 

To allocate costs across (1) beef, (2) 

pork, and (3) lamb processors, AMS 

allocated one-third of the costs to each 

of (1) beef, (2) pork, and (3) lamb for 

packers that processed all three species. 

For packers processing any two, AMS 

allocated one half the costs to each. 

AMS estimated that all live poultry 

dealers that are regulated under the final 

rule will require one hour of an 

attorney’s time costing the industry 

$13,000 286 and one hour of 

management time costing the industry 

$8,000 287 for learning the rule, 

reviewing, and adjusting contracts. The 

total costs for learning, reviewing, and 

adjusting contracts will be $21,000 288

for live poultry dealers. 

AMS expects that packers will require 

an estimated one hour of an attorney’s 

time and one hour of management time 

costing the industry $85,000. AMS 

estimates the total costs will be $40,000 

for beef packers and $16,000 for lamb 

packers to learn and review the rule and 

adjust contracts.289 Pork packers’ share 

of the packers’ costs will be $29,000. 

AMS also expects that rule will cost all 

575 swine contractors an hour of an 

attorney’s time and one hour of 

management time costing a total of 

$135,000 across all swine contractors.290

Combining costs to pork packers with 

costs to swine contractors arrives at a 

total cost of $164,000 for hog and pork 

markets. 

Direct Recordkeeping Costs for the Final 

Rule 

Costs to comply with the 

recordkeeping requirements are likely 

relatively low. Section 201.304(c) 

requires specific records that, if the 

regulated entity maintains, should be 

kept for a period of five years, including 

policies and procedures, staff training 

materials, materials informing covered 

producers regarding reporting 

mechanisms and protections, 

compliance testing, board of directors’ 

oversight materials, and any records of 

the number and nature of unduly 

prejudicial or unjustly discriminatorybased complaints received. 

Costs of recordkeeping include 

regulated entities maintaining and 

updating compliance records and are 

considered a direct cost. Some smaller 

regulated entities that currently don’t 

maintain records may voluntarily 

decide to develop formal policies, 

procedures, training, etc. to comply 

with the rule and will then have records 

to maintain. 

AMS expects the recordkeeping costs 

will comprise the time required by 

regulated entities to store and maintain 

records they already keep. AMS expects 

that the costs will be relatively small 

because many packers, live poultry 

dealers, and swine contractors may 

currently have few records concerning 

policies and procedures, staff training 

materials, materials informing covered 

producers regarding reporting 

mechanisms and protections, 

compliance testing, and board of 

directors’ oversight materials related to 

prejudicial treatment. Some smaller 

firms might not have any records to 

store. Others already store the records 

and may have no new costs. 

AMS estimated that recordkeeping 

time for larger entities will be greater 

than for smaller entities, and thus 

estimated costs by quartiles, from largest 

entities to smallest. AMS estimated that 

§ 201.304(c) will require packers, live 

poultry dealers, and swine contractors 

in each quartile an average 4.00 hours, 

2.00 hours, 1.33 hours, and 0.67 hours 

of administrative time for the first, 

second, third, and fourth quartiles, 

respectively. Additionally, AMS 

estimated that the hours required of 

managers, attorneys, and information 

technology staff each will average 1.50 

hours, 0.75 hours, 0.50 hours, and 0.25 

hours for the first, second, third, and 

fourth quartiles, respectively. 

AMS also expects that packers, live 

poultry dealers, and swine contractors 

will incur continuing recordkeeping 

costs in each successive year. AMS 

estimated that § 201.304(c) will require 

an average of 3.00 hours, 1.50 hours, 

1.00 hour, and 0.50 hour of 

administrative assistant time; 1.50 

hours, 0.75 hour, 0.50 hour, and 0.25 

hour of time each from managers and 

attorneys; and 1.00 hour, 0.50 hour, 0.33 

hour, and 0.17 hour of time from 

information technology staff for packers, 

live poultry dealers, and swine 

contractors in the first, second, third, 

and fourth quartiles, respectively, to 

setup and maintain the required records 

in each succeeding year. 

Estimated first-year costs for 

recordkeeping requirements in 

§ 201.304(c) totaled $30,000 for live 

poultry dealers,291 $193,000 for swine 


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× (1.5 hours + .75 hours + .5 hours + .25 hours)))/ 

4 = $30,132. 

292 575 swine contractors × (($44.51 per hour 

admin. cost × (4 hours + 2 hours + 1.33 hours + 

.67 hours)) + ($86.83 per hour manger cost × (1.5 

hours + .75 hours + .5 hours + .25 hours)) + 

($147.19 legal cost × (1.5 hours + .75 hours + .5 

hours + .25 hours)) + ($93.68 information tech cost 

× (1.5 hours + .75 hours + .5 hours + .25 hours)))/ 

4 = $192,507. 

293 365 packers × (($44.51 per hour admin. cost 

× (4 hours + 2 hours + 1.33 hours + .67 hours)) + 

($86.83 per hour manger cost × (1.5 hours + .75 

hours + .5 hours + .25 hours)) + ($147.19 legal cost 

× (1.5 hours + .75 hours + .5 hours + .25 hours)) 

+ ($93.68 information tech cost × (1.5 hours + .75 

hours + .5 hours + .25 hours)))/4 = $122,200. 

294 90 live poultry dealers × (($44.51 per hour 

admin. cost × (3 hours + 1.5 hours + 1 hours + .5 

hours)) + ($86.83 per hour manger cost × (1.5 hours 

+ .75 hours + .5 hours + .25 hours)) + ($147.19 legal 

cost × (1.5 hours + .75 hours + .5 hours + .25 hours)) 

+ $93.68 information tech cost × (1 hours + .5 hours 

+ .33 hours + .17 hours)))/4 = $26,021. 

295 575 swine contractors × (($44.51 per hour 

admin. Cost × (3 hours + 1.5 hours + 1 hours + .5 

hours)) + ($86.83 per hour manger cost × (1.5 hours 

+ .75 hours + .5 hours + .25 hours)) + ($147.19 legal 

cost × (1.5 hours + .75 hours + .5 hours + .25 hours)) 

+ $93.68 information tech cost × (1 hours + .5 hours 

+ .33 hours + .17 hours)))/4 = $166,244. 

296 365 packers × (($44.51 per hour admin. cost 

× (3 hours + 1.5 hours + 1 hours + .5 hours)) + 

($86.83 per hour manger cost × (1.5 hours + .75 

hours + .5 hours + .25 hours)) + ($147.19 legal cost 

× (1.5 hours + .75 hours + .5 hours + .25 hours)) 

+ $93.68 information tech cost × (1 hours + .5 hours 

+ .33 hours + .17 hours)))/4 = $105,529. 

contractors,292 and $122,000 for 

packers.293 Estimated yearly continuing 

costs for recordkeeping requirements in 

§ 201.304(c) totaled $26,000 for live 

poultry dealers,294 $166,000 for swine 

contractors,295 and $106,000 for 

packers.296

Breaking out costs by market, AMS 

expects recordkeeping requirements in 

§ 201.304(c) to cost beef packers $58,000 

in the first year and $50,000 in each 

following year. Section 201.304(c) will 

cost lamb packers $23,000 in the first 

year and $20,000 in successive years. 

Section 201.304(c) will cost pork 

packers $42,000, and it will cost swine 

contractors $193,000 for a total of 

$235,000 in the first year. Section 

201.304(c) will cost swine contractors 

$166,000 in successive years, and it will 

cost pork packers $36,000 for a total 

$202,000. 

Total Direct Administrative & 

Recordkeeping Costs for the Final Rule 

Table 8 below summarizes combined 

expected administrative and 

recordkeeping costs for regulated 

entities in the first year and in 

succeeding years. AMS expects that 

administrative and recordkeeping costs 

associated with §§ 201.304 and 201.306 

will cost each packer, swine contractor, 

and live poultry dealer an average $569 

in the first year and an average $289 in 

each succeeding year. First-year costs 

will total $51,000 for live poultry 

dealers, $327,000 for swine contractors, 

and $208,000 for packers. Costs in 

successive years will be due to 

recordkeeping requirements and will 

total $26,000 for live poultry dealers, 

$166,000 for swine contractors, and 

$105,000 for packers annually. 


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Table 8: Expected First-Year Cost and Succeeding Years Costs for Live 

Poultry Dealers, Packers, and Swine Contractors 

Dealer 

er to Swine Contractor 

Dealers 

Total Cost to Swine Contractors 

Total Cost to Packers 

Beef Packers* 

Pork Packers* 

Lamb Packers* 

First-Year Cost ($) 

569 

569 

51,000 

327,000 

208,000 

98,000 

71,000 

39,000 

Cost for Each 

Succeeding Year ($) 

289 

26,000 

166,000 

105,000** 

50,000 

35,000 

20,000 

*Many packers process more than one species of livestock, but AMS expects that each packer will 

require one hour of attorney's time and one hour of management time regardless of how many species of 

livestock it processes. To allocate costs across 1) beef, 2) pork, and 3) lamb processors, AMS allocated 

one-third of the costs to each of 1) beef, 2) pork, and 3) lamb for packers that processed all three species. 

**Column total may not sum due to rounding. 
Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 16187 

297Circular A–4. September 17, 2003, available at 

https://obamawhitehouse.archives.gov/omb/ 

circulars_a004_a-4/. Note: OMB issued an updated 

Circular A–4 on November 9, 2023. AMS developed 

its analysis for this final rule using the 2003 

Circular A–4 guidance. The 2023 guidance is 

effective March 1, 2024, and applies to draft final 

rules submitted to OMB’s Office of Information and 

Regulatory Affairs after December 31, 2024. The 

2023 guidance is available at https:// 

Continued 

The total direct administrative and 

recordkeeping costs are estimated to be 

$586,000 in the first year. Estimated first 

year total direct administrative and 

recordkeeping costs for the cattle and 

beef industry, hogs and pork, lamb, and 

poultry industries rounded to the 

nearest thousand dollars are listed in 

the following table. 

Final Rule: Ten-Year Total Direct 

Administrative and Recordkeeping 

Costs 

Expected administrative and 

recordkeeping costs of §§ 201.304 and 

201.306 for each year from 2023 through 

2032 appear in the table below. Based 

on the analysis, AMS expects the tenyear total direct administrative and 

recordkeeping costs of §§ 201.304 and 

201.306 to be $3.3 million. 

Final Rule: Present Value of Ten-Year 

Total Direct Administrative and 

Recordkeeping Costs 

Costs to be incurred in the future are 

lower than the same costs to be incurred 

today. This is because the money that 

will be used to pay the costs in the 

future can be invested today and earn a 

return on investment until the period in 

which the cost is incurred. After the 

cost has been incurred, the earned 

returns will still be available. 

To account for the time value of 

money, the administrative costs to be 

incurred in the future are discounted 

back to today’s dollars using a discount 

rate. The sum of all costs discounted 

back to the present is called the present 

value (PV) of total costs. AMS relied on 

both a three percent and seven percent 

discount rate as discussed in Circular 

A–4.297


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Table 9: Direct Administrative and Recordkeeping Costs for §§ 201.304 and 

201.306 in 2023 

Cattle Hogs Lambs Poultry Total 

($ Th) ($ Th) ($ Th) ($ Th) ($ Th) 

98 398 39 51 586 

Table 10: Ten-Year Total Direct Administrative and Recordkeeping Costs of 

§§ 201.304 and 201.306* 

Cattle Hogs Lambs Poultry Total 

Year ($ Th) ($ Th) ($ Th) ($ Th) ($ Th) 

2023 98 398 39 51 586 

2024 50 202 20 26 298 

2025 50 202 20 26 298 

2026 50 202 20 26 298 

2027 50 202 20 26 298 

2028 50 202 20 26 298 

2029 50 202 20 26 298 

2030 50 202 20 26 298 

2031 50 202 20 26 298 

2032 50 202 20 26 298 

Totals 547 2,216 217 285 3,266 

*Column total may not sum due to rounding. 
16188 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

www.whitehouse.gov/wp-content/uploads/2023/11/ 

CircularA-4.pdf. 

298Circular A–4. September 17, 2003, available at 

https://obamawhitehouse.archives.gov/omb/ 

circulars_a004_a-4/. 

299Total meat and poultry processing industry 

revenues. Source: https://www.ibisworld.com/ 

industry-statistics/market-size/meat-beef-poultryprocessing-united-states/#:∼:text=The%20market

%20size%2C%20measured%20by,industry

%20increased%200.2%25%20in%202022. 

300See, ‘‘Stay legally compliant (sba.gov),’’ 

available at https://www.sba.gov/business-guide/ 

manage-your-business/stay-legally-compliant (Last 

accessed 8/9/2022). 

AMS calculated the PV of the ten-year 

total direct administrative and 

recordkeeping costs of the regulations 

using a three percent and seven percent 

discount rate. The PVs appear in Table 

11. 

AMS expects the PV of the ten-year 

total administrative and recordkeeping 

costs of §§ 201.304 and 201.306 to be 

$2.8 million at a three percent discount 

rate and $2.4 million at a seven percent 

discount rate. 

Final Rule: Annualized PV of Ten-Year 

Total Direct Administrative and 

Recordkeeping Costs 

AMS then annualized the PV of the 

ten-year total administrative and 

recordkeeping costs (referred to as 

annualized costs) of §§ 201.304 and 

201.306 using both a three percent and 

seven percent discount rate as required 

by Circular A–4 and the results appear 

in Table 12.298

AMS expects the annualized ten-year 

administrative and recordkeeping costs 

of final §§ 201.304 and 201.306 to be 

$331,000 at a three percent discount rate 

and $336,000 at a seven percent 

discount rate. 

Cost-Benefit Comparison of the Final 

Rule 

The expected costs of this rule are 

very small relative to the size of the 

industry; and expected benefits are 

expected to be proportional to 

reductions in conduct this rule 

addresses. Combined sales of beef, pork, 

and broiler chicken in the U.S. for 2022 

were approximately $294.5 billion.299

As discussed above, the total cost of 

§§ 201.304 and 201.306 in the first year 

is estimated to be $586,000, or 0.0002 

percent of revenues. A reduction in 

prejudicial, discriminatory, retaliatory, 

and deceptive practices will lead to 

benefits that will be directly related to 

the reductions in these practices. If the 

reductions are small, the benefits will be 

small. The greater the reductions, the 

greater the benefits. AMS expects that 

the costs and benefits to society from 

the rule will be very small in relation to 

the total value of industry production, 

leading to negligible indirect effects on 

industry supply and demand, including 

price and quantity effects. 

Regulatory Alternative 3: Small 

Business Exemption Alternative 

The third regulatory alternative that 

AMS considered is issuing §§ 201.304 

and 201.306, but exempting small 

businesses, as defined by the SBA, from 

compliance with the recordkeeping 

requirement of § 201.304(c).300 All other 

provisions of §§ 201.304 and 201.306 

will still apply to small businesses. 

Most packers are small businesses under 

the SBA definition. Of the 365 packers 

reporting to AMS, 348 are small 

businesses. Two hundred fifty-three 

beef packers and 183 pork packers are 

small businesses. All 139 lamb packers 

are small businesses. Packers include 

multi-species packers. One hundred 

eight swine contractors are small 

businesses. There are 55 small poultry 

dealers. 

Regulatory Alternative 3: Total Costs of 

the Small Business Exemption 

Alternative 

Table 13 summarizes combined 

expected administrative and 

recordkeeping costs for regulated 

entities in the first year and in 

succeeding years. AMS expects that 

administrative and recordkeeping costs 

associated with a small business 

exemption alternative will cost each live 

poultry dealer, swine contractor, and 

packer an average of $448, $548, and 

$265, respectively, in the first year. 

AMS expects costs to average $185, 

$271, and $27 for live poultry dealers, 

swine contractors, and packers, 

respectively, in each succeeding year. 

First-year costs will total $40,000 for 

live poultry dealers, $315,000 for swine 

contractors, and $97,000 for packers. 


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Table 11: PV of Ten-Year Direct Administrative and Recordkeeping Cost of 

§§ 201.304 and 201.306 

Discount Rate Final Rule($ Th) 

Three Percent 2,820 

Seven Percent 2,361 

Table 12: Annualized Direct Administrative and Recordkeeping Costs of 

§§ 201.304 and 201.306 

Discount Rate Final Rule($ Th) 

Three Percent 331 

Seven Percent 336 
Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 16189 

Costs in successive years will be due to 

recordkeeping requirements and will 

total $17,000 for live poultry dealers, 

$156,000 for swine contractors, and 

$10,000 for packers annually. The total 

direct administrative and recordkeeping 

costs are estimated to be $452,000 in the 

first year. 

As discussed above, AMS considers 

the total costs from §§ 201.304 and 

201.306 to be increased direct 

administrative and recordkeeping costs 

with no indirect costs from adjustments 

by the cattle, hog, and poultry industries 

to reduce their use of AMAs, change to 

pricing mechanisms or poultry 

tournaments, and no substantial 

changes to existing marketing, or 

growing or production contracts. AMS 

estimated the costs to small business 

from the direct administrative costs of 

§§ 201.304 and 201.306 but excluded 

the recordkeeping costs of § 201.304(c) 

in this alternative option. 

AMS estimated the costs to small 

business to be the value of the time for 

management, attorneys, administrative 

staff, and information technology staff to 

review the rule and the firms’ practices 

determining compliance with the direct 

administrative costs of §§ 201.304 and 

201.306. AMS estimated costs for the 

Small Business Exemption Alternative 

similarly to the final rule. The only 

difference is the recordkeeping costs of 

§ 201.304(c) attributable to small 

business are not included in the costs 

for the Small Business Exemption 

Alternative. The estimates appear in 

Table 14. Costs for the final rule are also 

shown for convenience. 


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Table 13: Small Business Recordkeeping Exemption Alternative Expected 

First-Year Cost and Succeeding Years Costs for Live Poultry Dealers, 

Packers, and Swine Contractors 

Dealer 

er Swine Contractor 

er Packer 

Dealers 

Total Cost to Swine Contractors 

Total Cost to Packers 

Beef Packers* 

Pork Packers* 

Lamb Packers* 

First Year Cost ($) 

448 

548 

40,000 

315,000 

97,000 

44,000 

36,000 

16,000 

Cost for Each 

Succeeding Year ($) 

185 

271 

17,000 

156,000 

10,000 

3,000 

6,000 

0 

*Many packers process more than one species of livestock, but AMS expects that each packer will 

require one hour of attorney's time and one hour of management time regardless of how many species of 

livestock it processes. To allocate costs across 1) beef, 2) pork, and 3) lamb processors, AMS allocated 

one-third of the costs to each of 1) beef, 2) pork, and 3) lamb for packers that processed all three species. 
16190 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

AMS estimates that §§ 201.304 and 

201.306, with the small business 

exemption, will result in $427,000 in 

direct total costs in the cattle, hog, lamb, 

and poultry industries in the first full 

year following implementation and 

$182,000 each year in ongoing costs. 

AMS expects the ten-year total costs of 

§ 201.304 and 201.306 with a small 

business exemption to be $2.1 million. 

Exempting small business will save 

approximately $159,000 in the first year 

and $1.1 million over ten years. 

Regulatory Alternative 3: PV of Total 

Costs of the Small Business Exemption 

Alternative 

AMS calculated the PV of the ten-year 

total costs of the Small Business 

Exemption Alternative using both a 

three percent and seven percent 

discount rate and the PVs appear in the 

following table. Costs for the final rule 

are also shown for convenience. 

AMS expects the PV of the ten-year 

total costs of §§ 201.304 and 201.306 

with a small business exemption to be 

$1.8 million at a three percent discount 

rate and $1.5 million at a seven percent 

discount rate. 

Regulatory Alternative 3: Annualized 

Costs of the Small Business Exemption 

Alternative 

AMS then annualized the PV of the 

ten-year total costs of §§ 201.304 and 

201.306 with a small business 

exemption using both a three percent 

and seven percent discount rate and the 

results appear in Table 16. The final 

rule is also shown for convenience. 


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Table 14: Annual Total Direct Costs: Small Business Exemption Alternative 

Year Final Rule Small Business Exemption 

($ Th) Alternative($ Th) 

2023 586 427 

2024 298 182 

2025 298 182 

2026 298 182 

2027 298 182 

2028 298 182 

2029 298 182 

2030 298 182 

2031 298 182 

2032 298 182 

Total 3,266 2,067 

Table 15: PV of Ten-Year Total Cost: Small Business Exemption 

Small Business 

Discount Rate Final Rule($ Th) Exemption 

Alternative ($ Th) 

Three Percent 2,820 1,792 

Seven Percent 2,361 1,509 

Table 16: Ten-Year Annualized Costs - Small Business Exemption 

Small Business 

Discount Rate Final Rule($ Th) Exemption Alternative 

($ Th) 

Three Percent 331 210 

Seven Percent 336 215 
Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 16191 

301U.S. Small Business Administration. Table of 

Small Business Size Standards Matched to North 

American Industry Classification System Codes. 

Effective August 19, 2019. ‘‘The SBA Issues a Final 

Rule to Adopt NAICS 2017 for Small Business Size 

(last accessed 8/9/2022).’’ Available at https://

www.sba.gov/article/2018/feb/27/sba-issues-finalrule-adopt-naics-2017-small-business-sizestandards. 

302 $147.19 per hour × 1 hour of an attorney’s 

time + $86.83 per hour × 1 hour of a manager’s time 

= $234. 

AMS expects the annualized costs of 

§§ 201.304 and 201.306 with a small 

business exemption to be $210,000 at a 

three percent discount rate and 

$215,000 at a seven percent discount 

rate. 

Cost-Benefit Comparison of Regulatory 

Alternatives 

The status quo alternative has zero 

marginal costs. AMS compared the 

annualized costs of the final rule to the 

annualized costs of the Small Business 

Exemption Alternative by subtracting 

the annualized costs of the Small 

Business Exemption Alternative from 

those of the final rule and the results 

appear in Table 17. 

The annualized costs of the Small 

Business Exemption Alternative are 

$121,000 less expensive using a three 

percent discount rate and $121,000 less 

expensive using a seven percent 

discount rate. As is the case with costs, 

the benefits will be highest for the final 

rule because the full benefits will be 

received by all livestock producers and 

poultry growers, not just those doing 

business with large packers, swine 

contractors and live poultry dealers. 

Though the Small Business 

Exemption Alternative will save 

approximately $121,000 on an 

annualized basis, AMS chose final 

§§ 201.304 and 201.306 over the Small 

Business Exemption Alternative because 

AMS wishes to prevent broadly the kind 

of undue prejudices and unjust 

discrimination described in the rule. 

AMS believes that keeping relevant 

records will help promote compliance 

with this rule, that all packers, live 

poultry dealers, and swine contractors 

cannot purchase livestock or enter into 

contracts for growing services with the 

kind of undue prejudices and unjust 

discrimination described in the rule. 

AMS considered all three regulatory 

alternatives and believes that the final 

rule is the best alternative, as it benefits 

all livestock producers, swine 

production contract growers, and 

poultry growers, regardless of the size of 

the packer, swine contractor, or live 

poultry dealer with which they contract 

above the Status Quo Alternative. 

Regulatory Flexibility Analysis 

As part of the regulatory process, a 

Regulatory Flexibility Analysis (RFA) is 

conducted in order to evaluate the 

effects of this rule on small businesses. 

Under the final rule, there are no new 

regulatory text changes that would 

change the proposed rule costs and 

benefits of the regulatory analyses. 

The SBA defines small businesses by 

their North American Industry 

Classification System Codes (NAICS).301

Live poultry dealers, NAICS 311615, are 

considered small businesses if they have 

fewer than 1,250 employees. Meat 

packers, including, beef, veal, pork, 

lamb, and goat packers, NAICS 311611, 

are small businesses if they have fewer 

than 1,000 employees. Swine 

contractors, NAICS 112210, are 

considered small if their sales are less 

than $1 million annually. 

AMS maintains data on live poultry 

dealers from the annual reports these 

firms file with AMS. Currently, 90 live 

poultry dealers will be subject to the 

regulation. Fifty-five of the live poultry 

dealers will be small businesses 

according to the SBA standard. 

AMS records identified 365 packers 

that file annual reports or are due to file 

with PSD for their 2021 fiscal year. Two 

hundred sixty-one were beef packers. 

One hundred ninety-six were pork 

packers, and 139 were lamb or goat 

packers. Many firms slaughtered more 

than one species of livestock. For 

instance, 112 packers slaughtered both 

beef and pork. 

Most packers will be small 

businesses, although large packers are 

responsible for most meat production. 

Three hundred forty-eight packers will 

be small businesses. Two hundred fiftythree beef packers and 183 pork packers 

were small businesses. All 139 lamb and 

goat packers were small businesses. 

AMS does not have similar records for 

swine contractors because they are not 

required to register with AMS or 

provide annual reports. Table 24 of the 

2017 USDA Census of Agriculture 

indicated that there were 575 swine 

contractors in 2017. The Census of 

Agriculture table has categories for the 

number of head that swine contractors 

sold, but not the value of the head sold. 

AMS expects that the 467 swine 

contractors that sold 5,000 head of hogs 

or more were large businesses, and the 

108 contractors that sold less than 5,000 

head were small businesses. 

AMS estimated the costs in two parts. 

First, AMS expects that each packer, 

swine contractor, and live poultry 

dealer will review and learn the new 

rule and, if necessary, revise production 

and marketing contracts to ensure 

compliance with the new rule. Second, 

AMS expects that packers, live poultry 

dealers, and swine contractors will have 

additional costs associated with the new 

recordkeeping requirements in 

§ 201.304(c). 

AMS estimated that costs for 

reviewing and learning the final rule to 

small live poultry dealers, small 

packers, and small swine contractors 

will consist of one hour of a manager’s 

time and one hour of a lawyer’s time to 

review the requirements of §§ 201.304 

and 201.306. Expected first-year costs 

will be $234 302 for each live poultry 

dealer, each swine contractor, and each 

packer. This will amount to a total 

$13,000 for the 55 live poultry dealers, 

$81,000 for the 348 packers, and 

$25,000 for the 108 swine contractors. 

Concerning the recordkeeping 

requirements in final § 201.304(c), AMS 

expects the cost will be comprised of 

the time required to store and maintain 

records already kept. AMS expects that 

the costs will be relatively small 


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Table 17: Difference in Ten-Year Annualized Costs of§§ 201.304 and 

201.306 Between the Final Rule and Small Business Exemption Alternative 

Discount Rate ($ Th) 

Three Percent 121 

Seven Percent 121 
16192 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

303 10 live poultry dealers × ($44.51 per hour 

admin. cost × 2 hours + $86.83 per hour manger 

cost × .75 + $147.19 legal cost × .75 hours + $93.68 

information tech cost × .75 hours) + 45 live poultry 

dealers × ($44.51 per hour admin. cost × (1.33 hours 

+ .67 hours) + $86.83 per hour manger cost × (.5 

hours + .25 hours) + $147.19 legal cost × (.5 hours 

+ .25 hours) + $93.68 information tech cost × (.5 

hours + .25 hours))/2 = $10,881. 

304 108 swine contractors × ($44.51 per hour 

admin. cost × .67 hours + $86.83 per hour manger 

cost × .25 hours + $147.19 legal cost × .25 hours 

+ $93.68 information tech cost × .25 hours) = 

$12,053. 

305 74.25 packers × ($44.51 per hour admin. cost 

× 2 hours + $86.83 per hour manger cost × .75 hours 

+ $147.19 legal cost × .75 hours + $93.68 

information tech cost × .75 hours + 273.75 packers 

× ($44.51 per hour admin. cost × (2 hours + 1.33 

hours + .67 hours) + $86.83 per hour manger cost 

× (.75 hours + .5 hours + .25 hours) + $147.19 legal 

cost × (.75 hours + .5 hours + .25 hours) + $93.68 

information tech cost × (.75 hours + .5 hours + .25 

hours))/3 = $110,817. 

306 10 live poultry dealers × ($44.51 per hour 

admin. cost × 1.5 hours + $86.83 per hour manger 

cost × .75 + $147.19 legal cost × .75 hours + $93.68 

information tech cost × .50 hours) + 45 live poultry 

dealers × ($44.51 per hour admin. cost × (1 hours 

+ .5 hours) + $86.83 per hour manger cost × (.5 

hours + .25 hours) + $147.19 legal cost × (.5 hours 

+ .25 hours) + $93.68 information tech cost × (.33 

hours + .17 hours))/2 = $9,396. 

307 108 swine contractors × ($44.51 per hour 

admin. cost × .5 hours + $86.83 per hour manger 

cost × .25 hours + $147.19 legal cost × .25 hours 

+ $93.68 information tech cost × .17 hours) = 

$10,408. 

308 74.25 packers × ($44.51 per hour admin. cost 

× 3 hours + $86.83 per hour manger cost × 1.5 hours 

+ $147.19 legal cost × 1.5 hours + $93.68 

information tech cost × 1 hours + 273.75 packers 

× ($44.51 per hour admin. cost × (1.5 hours + 1 

hours + .5 hours) + $86.83 per hour manger cost × 

(.75 hours + .5 hours + .25 hours) + $147.19 legal 

cost × (.75 hours + .5 hours + .25 hours) + $93.68 

information tech cost × (.5 hours + .33 hours + .17 

hours))/3 = $110,817. 

because packers, live poultry dealers, 

and swine contractors will likely have 

few records concerning policies and 

procedures, staff training materials, 

materials informing covered producers 

regarding reporting mechanisms and 

protections, compliance testing, and 

board of directors’ oversight materials 

related to prejudicial treatment. Many 

firms might not have any records to 

maintain. Others already maintain the 

records and have no new costs. 

AMS expects that recordkeeping costs 

will be correlated with the size of the 

firms. AMS ranked packers, live poultry 

dealers, and swine contractors by size 

and grouped them into quartiles, 

estimating more recordkeeping time for 

larger entities than for the smaller 

entities. AMS estimated that 

§ 201.304(c) will require an average of 

4.00 hours of administrative assistant 

time, 1.50 hours of time each from 

managers, attorneys, and information 

technology staff for packers, live poultry 

dealers, and swine contractors in the 

first quartile, containing the largest 

entities, to setup and maintain the 

required records in the first year. AMS 

expects the packers, live poultry 

dealers, and swine contractors in the 

second quartile will require an average 

of 2.00 hours of administrative assistant 

time, 0.75 hours of time each from 

managers, attorneys, and information 

technology staff for first year costs. The 

third quartile will require 1.33 hours of 

administrative assistant time, 0.50 hours 

of time each from managers, attorneys, 

and information technology staff for first 

year costs, and the fourth quartile, 

containing the smallest entities, will 

require 0.67 hours of administrative 

assistant time, 0.25 hours of time each 

from managers, attorneys, and 

information technology staff. 

AMS also expects that packers, live 

poultry dealers, and swine contractors 

will incur continuing costs in each 

successive year. AMS estimated that 

§ 201.304(c) will require an average of 

3.00 hours of administrative assistant 

time, 1.50 hours of time each from 

managers and attorneys, and 1.00 hour 

of time from information technology 

staff for packers, live poultry dealers, 

and swine contractors in the first 

quartile to setup and maintain the 

required records in each succeeding 

year. AMS expects the packers, live 

poultry dealers, and swine contractors 

in the second quartile will require an 

average of 1.50 hours of administrative 

assistant time, 0.75 hours of time each 

from managers and attorneys, and 0.50 

hours of time from information 

technology staff in each succeeding 

year. The third quartile will require 1.00 

hour of administrative assistant time, 

0.50 hours of time each from managers 

and attorneys, and 0.33 hours of time 

from information technology staff in 

each succeeding year, and the fourth 

quartile will require 0.50 hours of 

administrative assistant time, 0.25 hours 

of time each from managers and 

attorneys, and 0.17 hours from 

information technology staff. 

Estimated first-year costs for 

recordkeeping requirements in final 

§ 201.304(c) totaled $11,000 for live 

poultry dealers,303 $12,000 for swine 

contractors,304 and $111,000 for 

packers.305 Estimated yearly continuing 

costs for recordkeeping requirements in 

§ 201.304(c) totaled $9,000 for live 

poultry dealers,306 $10,000 for swine 

contractors,307 and $96,000 for 

packers.308

Total expected first year costs for 

small businesses, including one time 

reviewing costs and recordkeeping costs 

will be $192,000 for packers, $37,000 for 

swine contractors, and $24,000 for live 

poultry dealers. The table below lists 

expected costs for small businesses 

subject to §§ 201.304 and 201.306. AMS 

expects marginal costs to total $255,000 

in the first year. Ten-year costs 

annualized at three percent will be 

$107,000 for packers, $13,000 for swine 

contractors, and $11,000 for live poultry 

dealers. Total ten-year costs annualized 

at three percent will be expected to be 

$131,000. 

The table below shows that ten-year 

costs annualized at seven percent will 

be $109,000 for packers, $14,000 for 

swine contractors, and $11,000 for live 

poultry dealers. Total ten-year costs 

annualized at seven percent will be 

expected to be $134,000. 


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Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 16193 

Live poultry dealers annually file 

reports with AMS that list each firm’s 

net sales. Packers that purchase more 

than $500,000 annually in livestock also 

file annual reports that list net sales. 

While packers that annually slaughter 

less than $500,000 in livestock also file 

annual reports with AMS, in order to 

reduce the reporting requirements for 

small packers, they are not required to 

provide annual net sales. 

Data from the annual reports enables 

AMS to compare average net sales for 

small pork packers, beef packers, and 

live poultry dealers to the expected 

costs of §§ 201.304 and 201.306 in the 

table below. A shortcoming in the 

comparison is that net sales for smallest 

packers, those that purchase less than 

$500,000 in livestock, are not included 

in the average. 

Swine contractors are not required to 

file annual reports with AMS, and 

similar net sales data are not available 

for swine contractors. Census of 

Agriculture’s data have the number of 

head sold by size classes for farms that 

sold their own hogs and pigs in 2017 

and that identified themselves as 

contractors or integrators, but not the 

value of sales nor the number of head 

sold from the farms of the contracted 

production. To estimate average revenue 

per establishment, AMS used the 

estimated average value per head for 

sales of all swine operations and the 

production values for firms in the 

Agriculture Census size classes for 

swine contractors. 

Table 19 compares the average per 

entity first-year costs of final §§ 201.304 

and 201.306 to the average revenue per 

establishment for all regulated small 

businesses. First-year costs are 

appropriate for a threshold analysis 

because all the costs will occur in the 

first year. First-year costs per regulated 

entity are considerably higher than 

annualized costs, and any ratio of 

annualized costs to revenues will be less 

than a ratio of first-year costs to 

revenues. 


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Table 18: Estimated Industry Total Costs to Small Businesses 

Packers Swine Poultry Total Estimate Type ($) Contractors Processors ($) ($) ($) 

First-Year Costs 192,000 37,000 24,000 255,000 

10 years Annualized at Three 107,000 13,000 11,000 131,000 Percent 

10 years Annualized at Seven 109,000 14,000 11,000 134,000 Percent 

Table 19: Comparison of Average Costs per Entity to Average Revenues per 

Entity for Small Businesses 

Average Average Average Annualized First-Year Annualized No. of Revenue or First- Cost as Cost Cost as 

NAICS Small Net Sales Per Year Percent of Discounted Percent of 

Businesses Establishment Costs Revenue at 7 Percent Revenue 

($) ($) (percent) (percent) 

112210 -

Swine 108 485,860 346 0.0711 130 0.0267 

Contractor 

311615 -

Poultry 55 52,888,111 432 0.0008 206 0.0004 

Processor 

311611 - 348 75,838,951 552 0.0007 312 0.0004 Meat Packer* 

*Averages exclude net sales for packers that purchased less than $500,000 in livestock annually. 
16194 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

309 $147.19 per hour × 1 hour of an attorney’s 

time + $86.83 per hour × 1 hour of a manager’s time 

= $234. 

Average first-year costs as a percent of 

revenues are small. It is highest for 

swine contractors because average 

revenues for swine contractors are 

considerably smaller than average 

revenues for packers and live poultry 

dealers. At 0.0711 percent, the average 

first-year cost is small compared to 

revenue. 

Average net sales for packers listed in 

Table 18 have the problem of excluding 

the smallest packers, and consequently 

the averages are biased toward being too 

large. However, first-year cost as a 

percent of net sales is 0.0007 percent. 

Estimated first year cost for each packer 

is $552. These are relatively small 

numbers. If average net sales for each 

packer were only one hundredth of the 

amount listed in Table 19, estimated 

average first-year costs will be less than 

0.1 percent of net sales. 

AMS has limited data on revenues for 

the smallest packers and live poultry 

dealers. One hundred eleven packers 

submitted shortened annual reports to 

AMS because they purchased less than 

$500,000 in livestock. For the largest of 

these small packers, annual revenues 

are likely close to $500,000 and 

expected costs will be about 0.07 

percent. 

RFA Small Business Exemption 

Alternative: Recordkeeping Exemption 

AMS also considered a Small 

Business Exemption Alternative to final 

§§ 201.304 and 201.306. The Small 

Business Exemption Alternative will be 

the same as the final §§ 201.304 and 

201.306 in all respects with the 

exception that none of the 

recordkeeping requirements in 

§ 201.304(c) will apply to small 

businesses. This Small Business 

Exemption Alternative will cost small 

packers, swine contractors, and live 

poultry dealers less than §§ 201.304 and 

201.306 will cost. Recordkeeping costs 

comprised the largest share of the costs 

associated with §§ 201.304 and 201.306. 

Although the Small Business 

Exemption Alternative will not require 

small businesses to keep any additional 

records, small businesses will still be 

required to comply with all the other 

provisions of §§ 201.304 and 201.306. 

AMS expects that small live poultry 

dealers, small packers, and small swine 

contractors will need to review the new 

rule and determine whether the rule 

will require any changes to their 

procurement contracts or other business 

practices and make the necessary 

changes. AMS estimated that costs will 

consist of one hour of a manager’s time 

and one hour of a lawyer’s time to 

review the requirements of final 

§§ 201.304 and 201.306. This amounts 

to expected first-year costs of $234 309

for each live poultry dealer, each swine 

contractor, and each packer that 

qualifies as a small business. All costs 

will occur in the first year. 

The table below lists expected costs 

for small businesses subject to the Small 

Business Exemption Alternative. AMS 

expects marginal costs to total $120,000 

in the first year. The Small Business 

Exemption Alternative is expected to 

cost $81,000, $25,000, and $13,000 in 

the first year for packers, swine 

contractors, and live poultry dealers, 

respectively. 


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Table 20: Estimated Industry Total Costs for the Small Business Exemption 

Alternative 

Packers Swine Poultry Total Costs* Estimate Type ($) Contractors Processors ($) ($) ($) 

First-Year Costs 81,000 25,000 13,000 120,000 

10 years Annualized at Three 9,000 3,000 1,000 14,000 Percent 

10 years Annualized at Seven 11,000 3,000 2,000 16,000 Percent 

*Due to rounding, values in "Total Costs" column may not match the sum of costs by entity type. 
Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 16195 

310 $586,000¥$427,000 = $159,000 (Table 15). 

Ten-year costs annualized at three 

percent will be $9,000 for packers, 

$3,000 for swine contractors, and $1,000 

for live poultry dealers. This amounts to 

$27 for each live poultry dealer, swine 

contractor, and packer. Total ten-year 

costs annualized at three percent will be 

expected to be $14,000. 

Ten-year costs annualized at seven 

percent will be $11,000 for packers, 

$3,000 for swine contractors, and $2,000 

for live poultry dealers. This amounts to 

$31 for each live poultry dealer, swine 

contractor, and packer. Total ten-year 

costs annualized at seven percent will 

be expected to be $16,000. 

The table below compares the average 

per entity first-year costs of the Small 

Business Exemption Alternative to the 

average revenue for each regulated small 

business. First-year costs are 

appropriate for a threshold analysis 

because all the costs associated with the 

alternative will occur in the first year. 

Average first-year costs as a percent of 

revenues are small. Similar to 

§§ 201.304 and 201.306, relative costs 

are highest for swine contractors 

because average revenues for swine 

contractors are considerably smaller 

than average revenues for packers and 

live poultry dealers. At 0.0482 percent, 

the first-year cost to swine contractors is 

small compared to revenue. 

Average net sales for packers listed in 

Table 20 have the same problem as the 

net sales figures in Table 18. They 

exclude the smallest packers, and 

consequently the averages are biased 

toward being too large. However, firstyear cost as a percent of net sales for 

packers purchasing more than $500,000 

per year is 0.0002 percent. Estimated 

first year cost for each packer is $234. 

Costs will be less than 0.1 percent of 

revenues for any packer with revenue 

greater than $23,400. Even for the 

smallest packer that AMS regulates, 

$234 will not likely have a significant 

economic impact. 

Comparison of Alternatives 

Expected costs for small businesses 

under final §§ 201.304 and 201.306 will 

be more than double the expected costs 

for small businesses under a Small 

Business Exemption Alternative. The 

cost difference is due to recordkeeping 

requirements. First-year costs will be 

$159,000 more for final §§ 201.304 and 

201.306 than the Small Business 

Exemption Alternative.310 While all the 

costs associated with the Small Business 

Exemption Alternative occur in the first 

year, small businesses will continue to 

incur recordkeeping costs associated 

with final §§ 201.304 and 201.306 into 

the future. Estimated costs annualized at 

seven percent are $121,000 higher for 

final §§ 201.304 and 201.306 than for 

the Small Business Exemption 

Alternative. 

With either the Small Business 

Exemption Alternative or the final rule, 

AMS expects the costs per entity to be 

relatively small. The number of 

regulated entities that could experience 

a cost increase is substantial. Most 

regulated packers and live poultry 

dealers are small businesses. However, 

AMS expects that few small businesses 

will experience significant costs. For all 

three groups of regulated entities: 

packers, live poultry dealers, and swine 

contractors, average first year costs are 

expected to amount to less than 0.1 

percent of annual revenue for either of 

the alternatives. AMS expects that any 

additional costs to small packers, live 

poultry dealers, and swine contractors 

from this rulemaking will not change 

their ability to continue operations or 

place any small businesses at a 

competitive disadvantage. 

AMS chose final §§ 201.304 and 

201.306 over the Small Business 

Exemption Alternative because AMS 

wishes to prevent the kind of undue 

prejudices and unjust discrimination 

described in the rule. AMS believes that 

keeping relevant records serves as 

constant reminder to all packers, live 

poultry dealers, and swine contractors 

that they cannot practice undue 

prejudice on the basis of protected bases 

and protected actions; retaliate on the 

basis of protected activities or actions; 

or deceive on the basis of contract 

formation, performance, termination, or 

refusal. 

Final §§ 201.304 and 201.306 are not 

expected to have a significant economic 

impact on a substantial number of small 

business entities as defined in the 

Regulatory Flexibility Act (5 U.S.C. 601 

et seq.). 

C. Executive Order 13175—Consultation 

and Coordination With Indian Tribal 

Governments 

E.O. 13175 requires Federal agencies 

to consult with Tribes on a governmentto-government basis on policies that 

have Tribal implications, including 

regulations, legislative comments or 

proposed legislation, and other policy 

statements or actions that have 

substantial direct effects on one or more 

Indian Tribes, on the relationship 

between the Federal Government and 

Indian Tribes or the distribution of 

power and responsibilities between the 

Federal Government and Indian Tribes. 

Three commenters including the 

Cherokee Nation, the Coalition of Large 

Tribes (COLT), and an academic 

commenter who is the executive 


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Table 21: Comparison of Per Entity Cost to Revenues for the Small Business 

Exemption Alternative 

Average Average Average FirstNo. of First- Revenue or Year Cost as 

NAICS Small Year Net Sales Per Percent of 

Businesses Costs Establishment Revenue 

($) ($) (percent) 

112210 - Swine Contractor 108 234 485,860 0.0482 

311615 - Poultry Processor 55 234 52,888,111 0.0004 

311611 -Meat Packer* 348 234 75,838,951 0.0003 

*Averages exclude net sales for packers that purchased less than $500,000 in livestock annually. 
16196 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

311See Vermont Agency of Natural Resources v. 

United States ex rel. Stevens, 529 U.S. 765 (2000). 

director of the Indigenous Food and 

Agriculture Initiative (IFAI) at the 

University of Arkansas School of Law, 

responded to USDA’s January 19, 2023, 

Tribal consultation seeking input on the 

proposed rule on Inclusive Competition 

and Market Integrity Under the Act. All 

three commenters gave context about 

Tribal participation in the meat and 

livestock industry and contended that 

the proposed rule should not apply to 

Tribes and Tribal entities. 

Comment: A commenter stated that 

the proposed rule’s provisions targeting 

unjust discrimination could 

inadvertently ban practices designed to 

enable Tribal enterprises to serve their 

own community, such as laws requiring 

businesses to provide contracting and 

employment preferences to Tribal 

members. According to the commenter, 

these practices could arguably be 

interpreted under the proposed rule as 

‘‘offering contract terms that are less 

favorable than those generally or 

ordinarily offered’’ or ‘‘differential 

contract performance or enforcement’’ 

which are ‘‘based upon the covered 

producer’s status as a market vulnerable 

individual.’’ According to the 

commenter, the regulation’s language, as 

proposed, and the lack of exceptions 

provided could have a chilling effect on 

the traditional animal husbandry 

practices of Tribes regardless of a Tribal 

business’s likelihood of prevailing 

under a legal challenge. 

AMS Response: In its final rule, AMS 

has included a limited list of legitimate 

business justifications including an 

exception to the rule’s prohibition on 

unjust discrimination for Tribes 

fulfilling their governmental function of 

serving their members. In doing so, 

AMS in this rule recognizes 

longstanding practice around Tribal 

entities, acting in their governmental 

capacities, in preferencing their own 

Tribal members and their descendants 

in the purchase and sale of livestock. 

Additionally, AMS has changed its 

approach from the proposed rule to no 

longer use the term ‘‘Market 

Vulnerable’’ to define to whom the rule 

offers protections. In shifting to the 

specific terms identified, the final rule 

provides greater certainty that Tribal 

members will be protected against 

discriminatory practices they may 

encounter in the marketplace. 

Comment: A Tribal commenter stated 

that Tribal producers may be hesitant to 

report discriminatory practices, stating 

that the long history of governmental 

indifference to, or even complicity in, 

unjust discrimination against their 

communities’ factors into a fear of 

retaliation. The commenter noted Tribal 

producers have also reported that they 

are not sure where to report violations 

of the Act, suggesting USDA should 

consider establishing a streamlined 

process for reporting issues under the 

Act and make concerted efforts to 

inform producers of their rights. 

AMS Response: Through expressly 

prohibiting discriminatory and 

retaliatory conduct in this rulemaking, 

AMS aims to address the commenters 

concern that ‘‘a long history of 

governmental indifference to, or even 

complicity in, discrimination against 

their communities’ factors into a fear of 

retaliation.’’ AMS has an online portal 

designed to receive complaints that may 

amount to violations under the Act and 

will direct Tribal producers to this 

portal as well as educating them as to 

other methods of reporting potential 

violations. Furthermore, AMS will 

consult with the USDA Office of Tribal 

Relations (OTR) and recommend 

educational outreach to ensure Tribal 

producers understand how to report a 

violation. 

Comment: All three commenters 

urged AMS not to apply the proposed 

rule to Tribes and Tribal entities. The 

commenters said Tribes are sovereign 

governments that retain authority to 

make their own laws and be ruled by 

them, unless expressly abrogated. 

Commenters cited the Supreme Court’s 

holding in Vermont Agency of Natural 

Resources v. United States ex rel. 

Stevens that statutory use of the term 

‘‘person’’ does not include sovereign 

entities unless there is an ‘‘affirmative 

showing of statutory intent to the 

contrary,’’ arguing that Tribes do not fall 

within any of these categories.311

Commenters said the omission of Tribes 

from the ‘‘person’’ definition also 

excludes them from being defined as 

‘‘packers’’ under the Act, as it defines 

packers as ‘‘any person engaged in’’ the 

packing activities enumerated in the 

definition. 

AMS Response: In this final rule, 

AMS excludes Tribes that are fulfilling 

their governmental function of serving 

their members from the rule’s 

prohibition on unjust discrimination. In 

doing so, AMS recognizes the 

longstanding practice of Tribal entities, 

acting in their governmental capacities, 

in preferencing their own Tribal 

members and their descendants in the 

purchase and sale of livestock. AMS 

believes that these changes are sufficient 

to address the immediate policy 

concerns underlying the comments in 

relation to this final rule and that any 

further changes would be outside the 

scope of this rule. 

Comment: Commenters stated that 

‘‘complying with unnecessary and 

burdensome federal regulations will 

hinder our small Tribal agricultural 

operations that already operate on very 

thin margins.’’ Arguing that given the 

small size of packing operations on 

Tribal land, they may lack the resources 

or financial ability to comply with 

recordkeeping and other regulatory 

requirements the rule imposes. A 

commenter stated that ‘‘record keeping, 

and other regulatory obligations are 

always more burdensome to small 

businesses that lack the legal and 

compliance departments of a large 

corporation, and isolated rural locations 

often struggle to hire and retain 

adequate office staff.’’ 

AMS Response: The economic costs of 

preventing undue prejudice, unjust 

discrimination, retaliation, and 

deception are minor in comparison to 

the benefit such protections will ensure 

for farmers and ranchers, including 

Tribal members. Many businesses 

already keep records for business 

purposes, therefore adding hardly any 

additional costs associated with 

compliance with this rule. Furthermore, 

Tribal commenters state that 

discrimination and retaliation are 

commonplace in Indian country and 

that these harms greatly hinder the 

success of Tribal producers. This rule 

aims to address those issues directly. 

AMS notes that the final rule excludes 

Tribes fulfilling their governmental 

function of serving their members from 

the rule’s prohibition on unjust 

discrimination and that any further 

changes would be outside the scope of 

this rule. 

Comment: Commenters stated that 

under Federal jurisprudence, sovereign 

immunity extends to business activities 

conducted off Tribal lands. Commenters 

contend that the U.S. Supreme Court 

has determined in Oklahoma Tax 

Commission v. Citizen Band 

Potawatomi Indian Tribe of Oklahoma, 

498 U.S. 505 (1991) decision, that Tribes 

in their commercial activity with other 

entities are covered under the umbrella 

of the Tribes’ sovereignty and even 

when Tribes entered into activities, 

executed off-reservation, they still enjoy 

sovereign immunity Kiowa Tribe of 

Oklahoma v. Manufacturing 

Technologies, 523 U.S. 751 (1998). See 

Garcia v. San Antonio Metro. Transit 

Auth., 469 U.S. 528, 546–47 (1985). 

AMS Response: AMS notes that the 

final rule excludes Tribes fulfilling their 

governmental function of serving its 

members from the rule’s prohibition on 

unjust discrimination. Any further 

changes would be outside the scope of 

this rule. 


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Comment: A commenter suggests that 

if adopted and applied to Tribal entities, 

the rule would have an adverse effect to 

its intent. Stating that if the intent of the 

proposed rule is to decrease market 

concentration and increase market 

access, adding additional regulatory 

burdens on small scale meat packing 

plants will make it more difficult for 

these small operations to enter, and 

maintain presence in, the market. 

AMS Response: The overarching 

objective of this rule is to improve 

market integrity and inclusive 

competition, and to decrease the 

undesirable conduct that is facilitated 

by concentration in agricultural 

markets. This rule aims to address three 

specific types of conduct that harm 

competition: undue prejudice and 

unjust discrimination, retaliation, and 

deception. As explained in the RIA/ 

RFA, any regulatory burdens created 

from enforcing the Act in this regard 

will be minimal in comparison to the 

benefits of protecting producers from 

this harmful conduct. AMS notes that 

the final rule excludes Tribes fulfilling 

their governmental function of serving 

their members from the rule’s 

prohibition on unjust discrimination 

and that any further changes would be 

outside the scope of this rule. 

D. Civil Rights Impact Statement 

Objective and Purpose AMS is issuing 

this final rule to revise the regulations 

that effectuate the Act. AMS is adopting 

these regulations under the Act’s 

provisions prohibiting undue prejudice, 

unjust discrimination, and deception to 

establish clearer, more effective 

standards to govern the modern 

marketplace and to better protect, 

through compliance and enforcement, 

individually harmed producers. AMS is 

concerned that the current regulations 

do not adequately address many unduly 

prejudicial, unjustly discriminatory, 

retaliatory, and deceptive practices, 

which are exacerbated by the 

environment created through increased 

horizontal concentration and vertical 

contracting. 

Who Is Impacted—The effects of this 

new regulation will fall on packers, 

swine contractors and live poultry 

dealers. AMS will cite regulated entities 

initiating actions or conduct. AMS 

believes creating an undue prejudice is 

a violation of section 202(b) of the Act. 

This is particularly true for those 

purchasing livestock on a carcass grade, 

carcass weight, or carcass grade and 

weight basis, under marketing 

agreements and production contracts. 

Swine contractors obtaining swine 

under swine production contracts and 

live poultry dealers acquiring poultry 

through poultry growing arrangements 

will also feel the impacts of the new 

regulation. 

Beneficiaries—The primary 

beneficiaries of §§ 201.304 and 201.306 

will include farmers, feedlot owners, 

swine production contract growers, and 

poultry growers. These producers and 

growers are those most likely to be 

harmed by undue prejudices, unjust 

discrimination, retaliation, and 

deception resulting from the actions or 

conduct of firms subject to the Act. 

Identifying criteria for recognizing what 

actions or conduct may create undue 

prejudices, discrimination, retaliation, 

and deception will help lower the 

number of instances and severity of the 

harm done by these types of actions or 

conduct. 

The Civil Rights Impact Analysis 

found that Asian, and Native Hawaiians 

or Other Pacific Islanders are 

disproportionately impacted by this 

rule. Other impacted producers, 

including Men, Women, Hispanics, 

Whites, Black/African Americans, and 

American Indians, are not 

disproportionately impacted by this 

rule. 

Impacts on Regulated Entities—AMS 

estimated the direct and indirect costs 

of regulation over a period of 10 years, 

from 2023 through 2032. AMS expects 

the direct costs to be comprised of 

administrative and litigation costs, 

largely borne by regulated entities. 

Impacts on Protected Groups— 

Protected groups will see minimal, if 

any, direct or indirect costs because of 

the implementation or enforcement of 

the new regulations. Although the 

required analysis indicates a 

disproportionate impact for Asian, and 

Native Hawaiians or Other Pacific 

Islanders, because the new regulations 

impact all industry participants equally, 

no individual or group would likely be 

adversely impacted. 

AMS has considered the potential 

civil rights implications of this final rule 

on members of protected groups to 

ensure that no person or group will be 

adversely or disproportionately at risk 

or discriminated against on the basis of 

race, color, national origin, gender, 

religion, age, disability, sexual 

orientation, marital or family status, or 

protected genetic information. 

Tribal Implications—Executive Order 

13175 requires Federal agencies to 

consult with American Indian Tribes on 

a government-to-government basis on 

policies that have Tribal implications. 

This includes regulations, legislative 

comments or proposed legislation, and 

other policy statements or actions. 

Consultation is required when such 

policies have substantial direct effects 

on one or more Indian Tribes, on the 

relationship between the Federal 

Government and Indian Tribes, or the 

distribution of power and 

responsibilities between the Federal 

Government and Indian Tribes. 

AMS has determined that this final 

rule does not have substantial direct 

effects on one or more Tribes that would 

require consultation. If a Tribe requests 

consultation, AMS will work with 

USDA’s Office of Tribal Relations to 

ensure meaningful consultation is 

provided where changes, additions, and 

modifications identified herein are not 

expressly mandated by Congress. AMS 

will also conduct outreach to ensure 

that Tribes and Tribal members are 

aware of the requirements and benefits 

under this final rule. 

Positive Impacts—This final rule 

affirms the importance of a clear and 

direct regulatory framework that 

prohibits deception, retaliation, undue 

prejudice, and unjust discrimination, 

thus protecting producers in the 

marketplace. The rational decisionmaking and robust competition so 

critical to economic success can most 

effectively occur in a market free of such 

practices. 

To ensure the potential disparately 

impacted groups identified above 

receive the full measure of the positive 

impacts of this new regulation, AMS 

will provide addition outreach actions 

directed toward these groups. 

E. Executive Order 12988—Civil Justice 

Reform 

This rule has been reviewed under 

Executive Order 12988. This rule is not 

intended to have retroactive effect. This 

rule would not preempt State or local 

laws, regulations, or policies, unless 

they present an irreconcilable conflict 

with this rulemaking. There are no 

administrative procedures that must be 

exhausted prior to any judicial 

challenge to the provisions of this rule. 

Nothing in this rule is intended to 

interfere with a person’s right to enforce 

liability against any person subject to 

the Act under authority granted in 

section 308 of the Act. 

F. E-Government Act 

USDA is committed to complying 

with the E-Government Act by 

promoting the use of the internet and 

other information technologies to 

provide increased opportunities for 

citizen access to Government 

information and services, and for other 

purposes. 

G. Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 (UMRA, Pub. L. 


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16198 Federal Register / Vol. 89, No. 45 / Wednesday, March 6, 2024 / Rules and Regulations 

312 $170 million UMRA threshold divided by 

$586,000 (first-year direct costs) multiplied by 100 

= 290. 

313Congressional Research Service. Updated 

February 23, 2021. Unfunded Mandates Reform Act: 

History, Impact, and Issues. Accessed at https://

crsreports.congress.gov/product/pdf/R/R40957/ 

109on02/08/2024. 

104–4) requires Federal agencies to 

assess the effects of their regulatory 

actions on State, local, and Tribal 

Governments and on the private sector. 

Agencies generally must prepare a 

written statement, including cost 

benefits analysis, for proposed and final 

rules with ‘‘Federal mandates’’ that may 

result in expenditures of $100 million or 

more (adjusted for inflation) in any 1 

year for State, local or Tribal 

governments, in the aggregate, or to the 

private sector. UMRA generally requires 

agencies to consider alternatives and 

adopt the more cost effective or least 

burdensome alternative that achieves 

the objectives of the rule. This rule 

contains no Federal mandates, as 

defined in title II of UMRA, for State, 

local, or Tribal Governments, and it 

does not contain a mandate for the 

private sector that would likely result in 

compliance costs of $100 million or 

more (adjusted annually for inflation) in 

at least one year. Therefore, this rule is 

not subject to the requirements of 

sections 202 and 205 of UMRA. 

AMS expects that the direct costs of 

this final rule will be 0.0002 percent of 

industry revenues in the first year of the 

rule, or $586,000. Indirect costs would 

have to be nearly 300 times 312 the 

expected direct costs to meet the 

compliance cost threshold of $170 

million or more in a single year ($100 

million in 1994 dollars adjusted for 

inflation as of 2021),313 which AMS has 

no basis to expect, given its professional 

expertise gained by regulating the 

industry and regularly communicating 

with regulated entities, growers, and 

producers. Indeed, to reach that 

threshold, discrimination, retaliation, 

and deception would have to occur at a 

prevalence that would have to touch 

more than 28 percent of all cattle 

slaughtered in the United States in 2022 

and account for the entirety of the 

difference in prices between the 

minimum and average liveweight price 

paid for cattle at the five regional cattle 

markets over the last 9 years. Extending 

that analysis to poultry and hogs would 

not change the conclusion. If anything, 

it would be even harder to meet the 

UMRA threshold because almost 

universal use of the tournament system 

in the poultry industry means higher 

compensation to certain growers is 

unlikely to increase compensation for 

growers in aggregate. Each tournament 

has a fixed total compensation pool, 

with growers ranked relative to other 

members of their respective tournament 

and compensated accordingly. 

In addition, AMS takes note of the 

exemption from UMRA for rules 

enforcing Constitutional rights of 

individuals or establishing or enforcing 

a statutory right that prohibits 

discrimination on the basis of age, race, 

color, religion, sex, national origin, 

handicap, or disability. (2 U.S.C. 1503) 

Provisions of this rule enforce the Act’s 

prohibition against unjust 

discrimination and undue prejudice to 

prohibit adverse treatment on the basis 

of race, color, religion, national origin 

(including ethnicity), sex (including 

sexual orientation and gender identity, 

as well as pregnancy), disability, marital 

status, or age. The rule also prohibits 

retaliatory and adverse actions that 

interfere with lawful communications, 

assertion of rights, associational 

participation, and other protected 

activities. 

H. Congressional Review Act 

Pursuant to Subtitle E of the Small 

Business Regulatory Enforcement 

Fairness Act of 1996 (also known as the 

Congressional Review Act, 5 U.S.C. 801 

et seq.), OMB’s Office of Information 

and Regulatory Affairs has determined 

that this final rule does not meet the 

criteria set forth in 5 U.S.C. 804(2). 

List of Subjects in 9 CFR Part 201 

Confidential business information, 

Reporting and recordkeeping 

requirements, Stockyards, Surety bonds, 

Trade practices. 

For the reasons set forth in the 

preamble, AMS amends 9 CFR part 201 

as follows: 

PART 201—ADMINISTERING THE 

PACKERS AND STOCKYARDS ACT 

■ 1. The authority citation for part 201 

continues to read as follows: 

Authority: 7 U.S.C. 181–229c. 

■ 2. Add subpart O, consisting of 

§§ 201.300 through 201.390, to read as 

follows: 

Subpart O—Competition and Market 

Integrity 

Sec. 

201.300–201.301 [Reserved] 

201.302 Definitions. 

201.303 [Reserved] 

201.304 Undue prejudices or disadvantages 

and unjust discriminatory practices. 

201.305 [Reserved] 

201.306 Deceptive practices. 

201.307–201.308 [Reserved] 

201.389 [Reserved] 

201.390 Severability. 

Subpart O—Competition and Market 

Integrity 

§ § 201.300–201.301 [Reserved] 

§ 201.302 Definitions. 

For purposes of this subpart, the 

following definitions apply: 

Covered producer means a livestock 

producer as defined in this section or a 

swine production contract grower or 

poultry grower as defined in section 2(a) 

of the Act (7 U.S.C. 182(8), (14)). 

Livestock producer means any person, 

except an employee of the livestock 

owner, engaged in the raising of and 

caring for livestock. 

Regulated entity means a swine 

contractor or live poultry dealer as 

defined in section 2(a) of the Act (7 

U.S.C. 182(8)) or a packer as defined in 

section 201 of the Act (7 U.S.C. 191). 

§ 201.303 [Reserved] 

§ 201.304 Undue prejudices or 

disadvantages and unjust discriminatory 

practices. 

(a) Prohibited bases. (1) Except as 

provided in paragraph (a)(3) of this 

section, a regulated entity may not 

prejudice, disadvantage, inhibit market 

access, or otherwise take an adverse 

action against a covered producer with 

respect to livestock, meats, meat food 

products, livestock products in 

unmanufactured form, or live poultry 

based upon the following 

characteristics: 

(i) On the basis of the covered 

producer’s race, color, religion, national 

origin, sex (including sexual orientation 

and gender identity), disability, marital 

status, or age. 

(ii) On the basis of the covered 

producer’s status as a cooperative. 

(2) Actions that prejudice, 

disadvantage, inhibit market access, or 

are otherwise adverse under paragraph 

(a)(1) of this section are as follows: 

(i) Offering contract terms that are less 

favorable than those generally or 

ordinarily offered to similarly situated 

covered producers. 

(ii) Refusing to deal with a covered 

producer on terms generally or 

ordinarily offered to similarly situated 

covered producers. 

(iii) Performing under or enforcing a 

contract differently than with similarly 

situated covered producers. 

(iv) Requiring a contract modification 

or renewal on terms less favorable than 

similarly situated covered producers. 

(v) Terminating or not renewing a 

contract. 

(vi) Any other action that a reasonable 

covered producer would find materially 

adverse. 

(3) The following actions by a 

regulated entity do not prejudice, 


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disadvantage, inhibit market access, or 

constitute adverse action under 

paragraph (a)(1) of this section: 

(i) Fulfilling a religious commitment 

relating to livestock, meats, meat food 

products, livestock products in 

unmanufactured form, or live poultry. 

(ii) A Federally recognized Tribe, 

including its wholly or majority-owned 

entities, corporations, or Tribal 

organizations, performing its Tribal 

governmental functions. 

(b) Retaliation prohibited. (1) A 

regulated entity may not retaliate or 

otherwise take an adverse action against 

a covered producer based upon the 

covered producer’s participation in an 

activity described in paragraph (b)(2) of 

this section. 

(2) The following activities by covered 

producers are protected under 

paragraph (b)(1) of this section unless 

otherwise prohibited by Federal, Tribal, 

or State law, including antitrust laws: 

(i) Communicating with a government 

entity or official or petitioning a 

government entity or official for redress 

of grievances with respect to livestock, 

meats, meat food products, livestock 

products in unmanufactured form, or 

live poultry. 

(ii) Refusing a request of the regulated 

entity to engage in a communication 

with a government entity or official that 

is not required by law. 

(iii) Asserting the right to form or join, 

or to refuse to form or join, a producer 

or grower association or organization, or 

cooperative or to collectively process, 

prepare for market, handle, or market 

livestock or poultry. 

(iv) Communicating or cooperating 

with a person for the purposes of 

improving production or marketing of 

livestock or poultry. 

(v) Communicating, negotiating, or 

contracting with a regulated entity, 

another covered producer, or with a 

commercial entity or consultant, for the 

purpose of exploring or entering into a 

business relationship. 

(vi) Supporting or participating as a 

witness in any proceeding under the 

Act, or any proceeding that relates to an 

alleged violation of any law by a 

regulated entity. 

(vii) Asserting any of the rights 

granted under Act or this part, or 

asserting contract rights. 

(3) The following actions are 

considered retaliation or an otherwise 

adverse action under paragraph (b)(1) of 

this section: 

(i) Terminating or not renewing a 

contract. 

(ii) Performing under or enforcing a 

contract differently than with similarly 

situated covered producers. 

(iii) Requiring a contract modification 

or a renewal on terms less favorable 

than similarly situated covered 

producers. 

(iv) Refusing to deal with a covered 

producer on terms generally or 

ordinarily offered to similarly situated 

covered producers. 

(v) Interfering in a farm real estate 

transaction or a contract with third 

parties. 

(vi) Any other action that a reasonable 

covered producer would find materially 

adverse. 

(c) Recordkeeping of compliance 

practices. (1) The regulated entity shall 

retain all records relevant to its 

compliance with paragraphs (a) and (b) 

of this section for no less than 5 years 

from the date of record creation. 

(2) Relevant records to paragraph 

(c)(1) of this section may include: 

policies and procedures, staff training 

materials, materials informing covered 

producers regarding reporting 

mechanisms and protections, 

compliance testing, board of directors’ 

oversight materials, and the number and 

nature of complaints received relevant 

to this section. 

§ 201.305 [Reserved] 

§ 201.306 Deceptive practices. 

(a) Prohibited practices. A regulated 

entity may not engage in the deceptive 

practices in paragraphs (b) through (e) of 

this section with respect to livestock, 

meats, meat food products, livestock 

products in unmanufactured form, or 

live poultry. 

(b) Contract formation. A regulated 

entity may not make or modify a 

contract with a covered producer by 

employing a false or misleading 

statement, or omission of material 

information necessary to make a 

statement not false or misleading. 

(c) Contract performance. A regulated 

entity may not perform under or enforce 

a contract with a covered producer by 

employing a false or misleading 

statement, or omission of material 

information necessary to make a 

statement not false or misleading. 

(d) Contract termination. A regulated 

entity may not terminate a contract with 

a covered producer by employing a false 

or misleading statement, or omission of 

material information necessary to make 

a statement not false or misleading. 

(e) Contract refusal. A regulated entity 

may not provide false or misleading 

information to a covered producer or 

association of covered producers 

concerning a refusal to contract. 

§ § 201.307—201.308 [Reserved] 

§ 201.389 [Reserved] 

§ 201.390 Severability. 

If any provision of this subpart, or any 

component of any provision, is declared 

invalid or the applicability thereof to 

any person or circumstances is held 

invalid, it is the Agricultural Marketing 

Service’s intention that the validity of 

the remainder of this subpart or the 

applicability thereof to other persons or 

circumstances shall not be affected 

thereby with the remaining provision, or 

component of any provision, to 

continue in effect. 

Erin Morris, 

Associate Administrator, Agricultural 

Marketing Service. 

[FR Doc. 2024–04419 Filed 3–5–24; 8:45 am] 

BILLING CODE 3410–02–P 


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