Senate File 2276 - Introduced SENATE FILE 2276 BY WAHLS A BILL FOR An Act providing for the processing and marketing of meat 1 and poultry products, including by prohibiting vertical 2 integration, providing for a health and safety program, and 3 providing for the divestiture of interests in processors by 4 certain retailers, and providing penalties. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 5885XS (3) 91 da/js
S.F. 2276 Section 1. NEW SECTION . 202D.1 Title. 1 This chapter be shall be known and may be cited as the 2 “Retailer-Processor Fairness Act” . 3 Sec. 2. NEW SECTION . 202D.2 Definitions. 4 As used in this chapter, unless the context otherwise 5 requires: 6 1. a. “Covered good” means a grocery item, including 7 packaged food or unpackaged food. 8 b. “Covered good” does not include motor fuel, prescription 9 drugs, tobacco products, or alcoholic beverages. 10 2. “Department” means the department of agriculture and land 11 stewardship. 12 3. “Dominant retailer” means any of the following: 13 a. A person that has annual retail sales of covered goods 14 in an aggregate amount exceeding eighteen billion dollars 15 as adjusted each year by an amount equal to the percentage 16 increase, if any, in the consumer price index for all urban 17 consumers for the last available twelve-month period published 18 in the federal register by the federal department of labor, 19 bureau of labor statistics. 20 b. A person who owns or operates at least one storefront 21 or distribution center located in more than twenty states, 22 including this state. 23 4. “Processor” means any establishment, plant, or operation 24 engaged in the slaughter, fabrication, processing, or packing 25 of livestock or poultry, including but not limited to the 26 production of beef, pork, lamb, chicken, or turkey products. 27 5. “Producer” means a person who holds a legal interest in a 28 land or facility where livestock or poultry are produced. 29 Sec. 3. NEW SECTION . 202D.11 Prohibition on vertical 30 integration. 31 1. A dominant retailer shall not engage in vertical 32 integration by doing any of the following: 33 a. Owning or controlling a processor including through 34 direct ownership, partial ownership, an exclusive contract, or 35 -1- LSB 5885XS (3) 91 da/js 1/ 7
S.F. 2276 the ownership or control of a livestock operation. A dominant 1 retailer, or a dominant retailer’s purchasing agent, shall not 2 directly or indirectly acquire, hold, or maintain, in whole or 3 in part, an ownership or controlling interest in a processor. 4 b. Entering into an exclusive contract with a producer that 5 requires the sale of livestock or poultry only to that dominant 6 retailer or a processor owned or controlled by the dominant 7 retailer. 8 2. A dominant retailer is liable for a violation of this 9 subchapter committed by a third party contracted by the 10 dominant retailer. 11 Sec. 4. NEW SECTION . 202D.12 Rulemaking. 12 The attorney general, in consultation with the department, 13 shall adopt rules pursuant to chapter 17A to administer and 14 enforce this chapter. 15 Sec. 5. NEW SECTION . 202D.13 Administration and 16 enforcement. 17 1. The attorney general, in consultation with the 18 department of agriculture and land stewardship, shall determine 19 which dominant retailers are engaging in vertical integration 20 as prohibited in section 202D.11. In making this determination 21 the attorney general shall do all of the following: 22 2. a. Not later than September 1, 2027, and every two 23 years thereafter, assess each person operating as a retailer 24 of covered goods within the state and make a preliminary 25 determination of whether the person is a dominant retailer 26 acting in violation of section 202D.11. 27 b. Publish a preliminary list of the name and address of 28 each person that the attorney general has initially determined 29 to be acting in violation of section 202D.11. 30 3. Not later than October 1, 2027, and every two years 31 thereafter, if necessary, the attorney general, in consultation 32 with the department, shall conduct an inquiry regarding whether 33 a person is a dominant retailer acting in violation of section 34 202D.11. 35 -2- LSB 5885XS (3) 91 da/js 2/ 7
S.F. 2276 a. In conducting the inquiry, the attorney general shall do 1 all of the following: 2 (1) Accept evidence, in affidavit form, signed by an 3 individual authorized to represent the person named on the 4 preliminary list stating that the named person is not a 5 dominant retailer acting in violation of section 202D.11. The 6 affidavit shall be sworn to by the affiant before an individual 7 who has authority to administer the oath, under penalty of 8 perjury. 9 (2) Accept petitions or public comment submitted by 10 interested persons, that includes evidence that a person is 11 a dominant retailer acting or not acting in violation of 12 section 202D.11. The evidence shall be admitted using the same 13 standard as provided in section 17A.4. 14 b. Within thirty days of accepting all evidence described in 15 paragraph “a” , the attorney general, in consultation with the 16 department, shall make a final decision as to whether a person 17 is a dominant retailer acting in violation of section 202D.11. 18 The attorney general’s final decision constitutes final agency 19 action under chapter 17A, and the person may seek judicial 20 review of such agency action pursuant to section 17A.19. 21 4. Notwithstanding subsection 3, a person included on 22 the preliminary list as provided in subsection 2 may demand 23 a contested case proceeding as provided in chapter 17A to 24 determine the question of whether the person is a dominant 25 retailer acting in violation of section 202D.11. The attorney 26 general’s final decision constitutes final agency action under 27 chapter 17A and the person may seek judicial review of such 28 agency action pursuant to section 17A.19. 29 5. The attorney general shall publish a final list of the 30 name and address of each person that the attorney general has 31 determined to be a dominant retailer acting in violation of 32 section 202D.11. A person shall not be included on the final 33 list until after the time that the person’s right to seek 34 judicial review has expired or after all judicial review of the 35 -3- LSB 5885XS (3) 91 da/js 3/ 7
S.F. 2276 person’s rights has been exhausted, and the attorney general’s 1 final decision has been upheld. The final list shall be posted 2 on the attorney general’s internet site. 3 Sec. 6. NEW SECTION . 202D.14 Compliance. 4 1. Not later than thirty days after the attorney general 5 publishes a final list that includes the name of a person who 6 the attorney general has determined to be a dominant retailer 7 acting in violation of section 202D.11, the person must submit 8 a compliance plan to the attorney general for approval by the 9 attorney general acting in cooperation with the department. 10 The compliance plan shall specify how the dominant retailer 11 will do all of the following: 12 a. Divest itself of any interest in a processor owned or 13 controlled by the dominant retailer. 14 b. Relinquish any interest in a contract entered into with 15 a producer. 16 2. a. A person whom the attorney general has determined to 17 be a dominant retailer acting in violation of section 202D.11 18 included on the final list described in subsection 1 must 19 comply with section 202D.11 within one year from the date the 20 final list is published. 21 b. Notwithstanding paragraph “a” , the attorney general 22 may, upon request of the person described in paragraph “a” , 23 extend the date of compliance by one hundred eighty days if the 24 attorney general determines that the person is acting in good 25 faith to complete the compliance plan. The attorney general 26 may base the decision to extend the period for compliance on 27 criteria established by the attorney general. 28 Sec. 7. NEW SECTION . 202D.15 Injunctive relief. 29 The attorney general or a county attorney may apply to the 30 district court for injunctive relief in order to restrain a 31 person from acting in violation of this chapter. 32 Sec. 8. NEW SECTION . 202D.16 Civil penalty. 33 A person who violates a provision of this chapter or rules 34 adopted or orders issued under this chapter is subject to a 35 -4- LSB 5885XS (3) 91 da/js 4/ 7
S.F. 2276 civil penalty of twenty-five thousand dollars. Each day of 1 a violation constitutes a separate offense. Moneys imposed, 2 assessed, and collected by the attorney general will be 3 credited to the general fund of the state. 4 Sec. 9. NEW SECTION . 202D.21 Health and safety program. 5 1. a. The department shall establish and administer a 6 program for processors who comply with fair labor practices 7 with financial incentives to support health and safety 8 practices for their employees. 9 b. As used in paragraph “a” , “fair labor practices” includes 10 a processor’s commitment to bargain with unions or associations 11 representing the processor’s employees. 12 2. The department shall implement this program when the 13 general assembly appropriates moneys required to support its 14 administration of a health and safety program to be implemented 15 by participating processors. 16 Sec. 10. CODE EDITOR DIRECTIVE. The Code editor shall 17 divide chapter 202D, as enacted in this Act, into subchapters 18 and shall designate sections 202D.1 through 202D.10 as 19 subchapter I, sections 202D.11 through 202D.20 as subchapter 20 II, and section 202D.21 as subchapter III. 21 EXPLANATION 22 The inclusion of this explanation does not constitute agreement with 23 the explanation’s substance by the members of the general assembly. 24 GENERAL. This bill creates new Code chapter 202D, 25 providing for the processing and marketing of meat and poultry 26 products. The new Code chapter is divided into subchapter 27 I, which includes general provisions including definitions, 28 subchapter II, which prohibits certain retailers of food items 29 from engaging in vertical integration, and subchapter III, 30 which provides a health and safety program for participating 31 processors. 32 TERMS. Under the bill, a dominant retailer is a person 33 that meets one of two criteria: (1) has annual retail sales 34 of covered goods exceeding $18 billion or (2) operates at 35 -5- LSB 5885XS (3) 91 da/js 5/ 7
S.F. 2276 least one storefront or distribution center located in more 1 than 20 states, including this state. A covered good includes 2 grocery items, but excludes motor fuel, prescription drugs, 3 tobacco products, or alcoholic beverages. A processor is an 4 establishment engaging in the slaughter or preparation of meat 5 or poultry products. A producer is a person that has a legal 6 interest in land or a facility where livestock or poultry are 7 produced. 8 PROHIBITION ON VERTICAL INTEGRATION —— GENERAL. The 9 bill prohibits a dominant retailer from engaging in vertical 10 integration that includes (1) owning or controlling a processor 11 or (2) entering into an exclusive contract with a producer 12 that requires the sale of meat or poultry only to the dominant 13 retailer or a processor controlled by the dominant retailer. 14 PROHIBITION ON VERTICAL INTEGRATION —— ADMINISTRATION OR 15 ENFORCEMENT. The bill is administered by the attorney general 16 in consultation with the department of agriculture and land 17 stewardship (DALS). The attorney general must investigate 18 which dominant retailers are engaging in vertical integration. 19 Every two years the attorney general must conduct an inquiry 20 and make a preliminary determination regarding whether a person 21 is a dominant retailer acting in violation of the bill’s 22 provisions prohibiting vertical integration. The attorney 23 general must make a determination based on evidence submitted 24 by the person and interested persons. However, a person 25 subject to the inquiry may instead demand a contested case 26 proceeding to decide the matter under the Iowa administrative 27 procedure Act (Code chapter 17A). In any case, the person has 28 a right to seek judicial review of the attorney general’s final 29 decision. If the attorney general’s final decision is not 30 overruled, the attorney general must include the name of the 31 dominant retailer on a list posted on the attorney general’s 32 internet site. 33 PROHIBITION ON VERTICAL INTEGRATION —— COMPLIANCE. A 34 dominant retailer determined to be engaged in vertical 35 -6- LSB 5885XS (3) 91 da/js 6/ 7
S.F. 2276 integration must submit a compliance plan to the attorney 1 general specifying how the dominant retailer will comply with 2 the law, including by divesting an interest in a processor or 3 relinquishing an interest in a contract with a producer. The 4 attorney general may apply to the district court for injunctive 5 relief in order to restrain a person from acting in violation 6 of the bill. 7 PROHIBITION ON VERTICAL INTEGRATION —— CIVIL PENALTY. 8 A person who violates a provision of the bill prohibiting 9 vertical integration is subject to a civil penalty of $25,000. 10 Each day that a violation continues constitutes a separate 11 offense. 12 HEALTH AND SAFETY PROGRAM. The bill requires DALS to 13 establish and administer a program for a processor that 14 complies with fair labor practices. A participating processor 15 may be awarded financial incentives to support health 16 and safety practices for the processor’s employees. The 17 department must implement the program when the general assembly 18 appropriates moneys required to support its administration. 19 -7- LSB 5885XS (3) 91 da/js 7/ 7