Senate File 2293 - Introduced
SENATE FILE
BY COMMITTEE ON AGRICULTURE
(SUCCESSOR TO SF 2135)
Passed Senate, Date Passed House, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act providing for the regulation of packers and the purchase
2 of swine from producers, and providing for penalties.
3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN
1 1 Section 1. NEW SECTION. 202D.1 PURPOSE.
1 2 The purpose of this chapter is to increase competition and
1 3 transparency among packers that purchase swine from producers.
1 4 Sec. 2. NEW SECTION. 202D.2 DEFINITIONS.
1 5 1. "Base price" means the price paid for swine, delivered
1 6 to a packer, before application of any premiums or discounts,
1 7 and expressed in dollars per hundred pounds of hot carcass
1 8 weight as calculated in the same manner as provided in 7
1 9 C.F.R. } 59.30.
1 10 2. "Business association" means the same as defined in
1 11 section 202B.102.
1 12 3. "Controlling interest" means actual control of a
1 13 business or the exercise of material participation, directly
1 14 or indirectly, in the management and policies of a business,
1 15 whether through the ownership of voting securities, by
1 16 contract, or otherwise.
1 17 4. "Covered packer" means a packer that is required to
1 18 report to the United States department of agriculture each
1 19 reporting day purchase data and slaughter data regarding swine
1 20 as provided in section 202D.3. However, a covered packer does
1 21 not include a packer which has a controlling interest in only
1 22 one packing plant.
1 23 5. "Department" means the department of agriculture and
1 24 land stewardship.
1 25 6. "Federal meat inspection Act" means the same as defined
1 26 in section 189A.2.
1 27 7. "Nonaffiliated producer" means a producer who sells
1 28 swine to a packer. In addition, all of the following must
1 29 apply:
1 30 a. The producer has less than a one percent equity
1 31 interest in the packer, including but not limited to as a
1 32 shareholder, partner, member, or beneficiary.
1 33 b. If the producer is a business association, the packer
1 34 has less than a one percent equity interest in the producer,
1 35 including but not limited to as a shareholder, partner,
2 1 member, or beneficiary.
2 2 c. The producer is not an officer, director, employee, or
2 3 owner of the producer who is also an officer, director,
2 4 employee, or owner of the packer. If the producer is a
2 5 business association, an officer, director, employee, or owner
2 6 of the producer cannot also be an officer, director, employee,
2 7 or owner of the packer.
2 8 d. The producer does not owe a fiduciary responsibility to
2 9 the packer.
2 10 e. If the producer is a business association, the packer
2 11 does not have an equity interest in the producer.
2 12 8. "Packer" means a business association engaged in buying
2 13 swine in commerce for purposes of slaughter, of manufacturing
2 14 or preparing meats or meat food products from swine for sale
2 15 or shipment in commerce, or of marketing meats or meat food
2 16 products from swine in an unmanufactured form acting as a
2 17 wholesale broker, dealer, or distributor in commerce.
2 18 9. "Processing plant" means the geographic location of an
2 19 establishment as defined in section 189A.2 which is both of
2 20 the following:
2 21 a. Subject to inspection by the department pursuant to
2 22 chapter 189A or the United States department of agriculture
2 23 pursuant to the federal Meat Inspection Act.
2 24 b. Slaughters an average of at least one hundred thousand
2 25 swine per year during the immediately preceding five calendar
2 26 years or has the capacity to slaughter that number of swine in
2 27 any one of those years.
2 28 10. "Producer" means a person who holds an ownership
2 29 interest or controlling interest in a business association
2 30 which operates a location where livestock are fed or otherwise
2 31 maintained, including a building, lot, yard, or corral; and
2 32 livestock which are fed or otherwise maintained at the
2 33 location.
2 34 11. "Reasonable competitive bidding opportunity" means
2 35 circumstances in which all of the following apply:
3 1 a. A written or oral agreement does not preclude a
3 2 producer from soliciting or receiving bids from other packers.
3 3 b. No circumstances, customs, or practices exist that do
3 4 any of the following:
3 5 (1) Establish the existence of an implied contract.
3 6 (2) Preclude the producer from soliciting or receiving
3 7 bids from other packers.
3 8 12. "Spot market sale" means a purchase and sale of swine
3 9 by a packer from a producer that specifies a firm base price
3 10 that may be equated with a fixed dollar amount on the date the
3 11 agreement is entered into under which the swine are
3 12 slaughtered not more than seven days after the date on which
3 13 the agreement is entered into, and under circumstances in
3 14 which a reasonable competitive bidding opportunity exists on
3 15 the date on which the agreement is entered into.
3 16 13. "Swine" means a porcine animal raised to be a feeder
3 17 pig, raised for seedstock, or raised for slaughter.
3 18 Sec. 3. NEW SECTION. 202D.3 ELECTRONIC PACKER REPORTING
3 19 == PURCHASE DATA FOR SWINE.
3 20 1. The department of agriculture and land stewardship
3 21 shall establish an electronic packer reporting system which
3 22 automatically receives data for all swine purchased and
3 23 slaughtered as reported daily by packers to the United States
3 24 department of agriculture pursuant to 7 U.S.C. ch. 38, subch.
3 25 II, pt. C. The department of agriculture and land stewardship
3 26 shall cooperate with the United States department of
3 27 agriculture as necessary in order to establish and administer
3 28 the electronic system.
3 29 2. The department of agriculture and land stewardship
3 30 shall establish and administer the electronic packer reporting
3 31 system in order to do all of the following:
3 32 a. Provide timely, accurate, and reliable market
3 33 information.
3 34 b. Facilitate more informed marketing decisions.
3 35 c. Promote competition in the swine slaughtering industry.
4 1 d. Enforce the provisions of section 202D.4.
4 2 Sec. 4. NEW SECTION. 202D.4 SPOT MARKET SALE
4 3 REQUIREMENTS.
4 4 For each reporting day, at least twenty=five percent of all
4 5 swine slaughtered by a covered packer must be purchased from
4 6 nonaffiliated producers by spot market sale.
4 7 Sec. 5. NEW SECTION. 202D.5 CITIZEN ACTION.
4 8 If a nonaffiliated producer cannot make a spot market sale
4 9 to a covered packer on a reporting day because a covered
4 10 packer violates section 202D.4, the nonaffiliated producer may
4 11 bring a civil action against the covered packer. The
4 12 nonaffiliated producer may bring the civil action in district
4 13 court for Polk county, the district court of the covered
4 14 packer's principal place of business in this state, or in the
4 15 district where the nonaffiliated producer resides in this
4 16 state or if the nonaffiliated producer is a business
4 17 association, its principal place of business in this state. A
4 18 covered packer who is guilty of violating section 202D.4 shall
4 19 be liable to the nonaffiliated producer for three times the
4 20 amount of the spot market sales price for the swine that the
4 21 nonaffiliated producer would have received if the violation
4 22 had not occurred. The court shall award the nonaffiliated
4 23 producer who prevails in the civil action reasonable attorney
4 24 fees and expert witness fees incurred by the nonaffiliated
4 25 producer, to be paid by the covered packer and taxed as part
4 26 of the costs of the civil action.
4 27 Sec. 6. NEW SECTION. 202D.6 PENALTIES.
4 28 A covered packer who violates a provision of section 202D.4
4 29 is subject to a civil penalty of not more than twenty=five
4 30 thousand dollars. The civil penalties collected under this
4 31 chapter shall be deposited into the general fund of the state.
4 32 Sec. 7. NEW SECTION. 202D.7 ENFORCEMENT ACTION.
4 33 1. a. The attorney general's office is the primary agency
4 34 responsible for enforcing this chapter.
4 35 b. The department shall notify the attorney general's
5 1 office if the department has reason to believe that a
5 2 violation of section 202D.4 has occurred.
5 3 2. The attorney general's office may bring an enforcement
5 4 action in district court in Polk county, in the county where
5 5 the violation occurs, or in the county where the covered
5 6 packer has its principal place of business. The attorney
5 7 general's office may do all of the following:
5 8 a. Apply to the district court for an injunction to do any
5 9 of the following:
5 10 (1) Restrain a covered packer from engaging in conduct or
5 11 practices in violation of this chapter.
5 12 (2) Require a covered packer to comply with a provision of
5 13 this chapter.
5 14 b. Apply to district court for the issuance of a subpoena
5 15 to obtain contracts, documents, or other records of a covered
5 16 packer for purposes of enforcing this chapter.
5 17 c. Bring an action in district court to enforce civil
5 18 penalties as provided in section 202D.6, including the
5 19 imposition, assessment, and collection of the civil penalties.
5 20 EXPLANATION
5 21 This bill regulates packers engaged in the business of
5 22 purchasing swine for slaughter and processing. It is based on
5 23 the federal Agricultural Marketing Act of 1946, and specific
5 24 provisions which require packers to report purchase data
5 25 relating to swine for slaughter to the United States
5 26 department of agriculture (7 U.S.C. ch. 38, subch. II, pt. C).
5 27 The bill is also based on provisions included in S. 325
5 28 introduced in the Senate of the United States on February 6,
5 29 2003, which states an intent to increase competition and
5 30 transparency among packers that purchase livestock including
5 31 swine from producers. That intention is rephrased in the
5 32 first section of the bill.
5 33 The bill requires the department of agriculture and land
5 34 stewardship to establish an electronic packer reporting system
5 35 which is to automatically receive purchase data and slaughter
6 1 data reported for swine by the United States department of
6 2 agriculture and provided by packers on a daily basis.
6 3 The bill generally defines the term "packer" as a person
6 4 who engages in buying swine for purposes of slaughter, or of
6 5 manufacturing or preparing meats or meat food products from
6 6 swine. The bill uses the term "covered packer" to describe a
6 7 packer required to report purchase data or slaughter data for
6 8 swine to the United States department of agriculture.
6 9 Generally, under the federal livestock reporting law, a packer
6 10 is a person who owns a federally inspected processing plant
6 11 which slaughters an average of at least 100,000 swine per year
6 12 during the immediately preceding five calendar years.
6 13 The bill requires that when a covered packer purchases
6 14 swine, it must reserve a percentage of its daily reported kill
6 15 for the purchase of swine from nonaffiliated producers on the
6 16 spot market. The bill defines a "spot market sale" in the
6 17 same manner as federal law to mean a purchase and sale of
6 18 swine by a packer from a producer that specifies a firm base
6 19 price on the date the agreement is executed, if the swine are
6 20 slaughtered not more than seven days after the date on which
6 21 the agreement is executed. It defines a "nonaffiliated
6 22 producer" to mean a producer who holds no more than a de
6 23 minimus equity interest (shares) in or fiduciary duty to the
6 24 packer.
6 25 The bill provides enforcement mechanisms. A nonaffiliated
6 26 producer may bring a legal action against a covered packer who
6 27 violates the bill's provisions and may be awarded treble
6 28 damages together with reasonable attorney fees and fees for
6 29 expert witnesses. The bill imposes civil penalties upon a
6 30 covered packer who violates the provisions of the bill.
6 31 The attorney general's office is the primary agency
6 32 responsible for enforcing the bill's provisions. The attorney
6 33 general's office may apply to district court for an injunction
6 34 to restrain a covered packer from engaging in conduct or
6 35 practices in violation of the bill's provisions, require a
7 1 covered packer to comply with a provision of the bill, obtain
7 2 a subpoena to obtain contracts, documents, or other records
7 3 for purposes of enforcing the bill's provisions, or bring an
7 4 action in district court to impose and collect the civil
7 5 penalties. The amount of the civil penalties and the
7 6 authority granted to the office of attorney general are
7 7 similar to provisions included in Code chapter 202B which
7 8 prohibits the ownership of swine operations by processors and
7 9 restricts contract feeding contracts executed by processors
7 10 and producers.
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