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House
File
2734
-
Introduced
HOUSE
FILE
2734
BY
SCHOLTEN
and
TUREK
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:
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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
Findings
and
declaration.
4
1.
The
general
assembly
finds
all
of
the
following:
5
a.
Concentration
in
the
meat
industry
has
materially
6
impaired
competition,
eroding
the
bargaining
power
of
Iowa
7
farmers,
independent
processors,
and
workers,
while
foreclosing
8
market
access
through
captive
supply
arrangements,
vertical
9
integration,
and
dominant
retailer
ownership
of
meat
processing
10
facilities.
11
b.
The
entry
of
national
retailers
with
substantial
market
12
share
into
the
direct
ownership
of
meat
processing
creates
13
structural
competitive
disadvantages
for
independent
Iowa
14
farmers,
independent
processors,
and
grocers
that
existing
15
market
mechanisms
have
failed
to
remedy.
16
c.
Federal
law,
as
evidenced
by
the
Sherman
Antitrust
Act
of
17
1890,
15
U.S.C.
§1
et
seq.,
the
Clayton
Antitrust
Act
of
1914,
18
15
U.S.C.
§12
et
seq.,
and
the
Packers
and
Stockyards
Act
of
19
1921,
7
U.S.C.
§181
et
seq.,
reflect
more
than
a
century-long
20
federal
commitment
to
competitive
agricultural
markets.
21
2.
The
general
assembly
declares
the
necessity
to
extend
22
state
enforcement
mechanisms
to
supplement
provisions
in
23
chapters
202,
202A,
202B,
202C,
and
553
in
order
to
further
24
deter
the
specific
threat
posed
by
dominant
retailer
ownership
25
of
meat
processing
facilities
within
this
state.
26
Sec.
3.
NEW
SECTION
.
202D.3
Definitions.
27
As
used
in
this
chapter,
unless
the
context
otherwise
28
requires:
29
1.
a.
“Covered
good”
means
a
grocery
item,
including
30
packaged
food
or
unpackaged
food.
31
b.
“Covered
good”
does
not
include
motor
fuel,
prescription
32
drugs,
tobacco
products,
or
alcoholic
beverages.
33
2.
“Department”
means
the
department
of
agriculture
and
land
34
stewardship.
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3.
“Dominant
retailer”
means
any
of
the
following:
1
a.
A
person
that
has
annual
retail
sales
of
covered
goods
2
in
an
aggregate
amount
exceeding
eighteen
billion
dollars
3
as
adjusted
each
year
by
an
amount
equal
to
the
percentage
4
increase,
if
any,
in
the
consumer
price
index
for
all
urban
5
consumers
for
the
last
available
twelve-month
period
published
6
in
the
federal
register
by
the
federal
department
of
labor,
7
bureau
of
labor
statistics.
8
b.
A
person
who
owns
or
operates
at
least
one
storefront
9
or
distribution
center
located
in
more
than
twenty
states,
10
including
this
state.
11
4.
“Processor”
means
any
establishment,
plant,
or
operation
12
engaged
in
the
slaughter,
fabrication,
processing,
or
packing
13
of
livestock
or
poultry,
including
but
not
limited
to
the
14
production
of
beef,
pork,
lamb,
chicken,
or
turkey
products.
15
5.
“Producer”
means
a
person
who
holds
a
legal
interest
in
a
16
land
or
facility
where
livestock
or
poultry
are
produced.
17
Sec.
4.
NEW
SECTION
.
202D.11
Prohibition
on
vertical
18
integration.
19
1.
A
dominant
retailer
shall
not
engage
in
vertical
20
integration
by
doing
any
of
the
following:
21
a.
Owning
or
controlling
a
processor
including
through
22
direct
ownership,
partial
ownership,
an
exclusive
contract,
or
23
the
ownership
or
control
of
a
livestock
operation.
A
dominant
24
retailer,
or
a
dominant
retailer’s
purchasing
agent,
shall
not
25
directly
or
indirectly
acquire,
hold,
or
maintain,
in
whole
or
26
in
part,
an
ownership
or
controlling
interest
in
a
processor.
27
b.
Entering
into
an
exclusive
contract
with
a
producer
that
28
requires
the
sale
of
livestock
or
poultry
only
to
that
dominant
29
retailer
or
a
processor
owned
or
controlled
by
the
dominant
30
retailer.
31
2.
A
dominant
retailer
is
liable
for
a
violation
of
this
32
subchapter
committed
by
a
third
party
contracted
by
the
33
dominant
retailer.
34
Sec.
5.
NEW
SECTION
.
202D.12
Rulemaking.
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The
attorney
general,
in
consultation
with
the
department,
1
shall
adopt
rules
pursuant
to
chapter
17A
to
administer
and
2
enforce
this
chapter.
3
Sec.
6.
NEW
SECTION
.
202D.13
Administration
and
4
enforcement.
5
1.
The
attorney
general,
in
consultation
with
the
6
department
of
agriculture
and
land
stewardship,
shall
determine
7
which
dominant
retailers
are
engaging
in
vertical
integration
8
as
prohibited
in
section
202D.11.
In
making
this
determination
9
the
attorney
general
shall
do
all
of
the
following:
10
2.
a.
Not
later
than
September
1,
2027,
and
every
two
11
years
thereafter,
assess
each
person
operating
as
a
retailer
12
of
covered
goods
within
the
state
and
make
a
preliminary
13
determination
of
whether
the
person
is
a
dominant
retailer
14
acting
in
violation
of
section
202D.11.
15
b.
Publish
a
preliminary
list
of
the
name
and
address
of
16
each
person
that
the
attorney
general
has
initially
determined
17
to
be
acting
in
violation
of
section
202D.11.
18
3.
Not
later
than
October
1,
2027,
and
every
two
years
19
thereafter,
if
necessary,
the
attorney
general,
in
consultation
20
with
the
department,
shall
conduct
an
inquiry
regarding
whether
21
a
person
is
a
dominant
retailer
acting
in
violation
of
section
22
202D.11.
23
a.
In
conducting
the
inquiry,
the
attorney
general
shall
do
24
all
of
the
following:
25
(1)
Accept
evidence,
in
affidavit
form,
signed
by
an
26
individual
authorized
to
represent
the
person
named
on
the
27
preliminary
list
stating
that
the
named
person
is
not
a
28
dominant
retailer
acting
in
violation
of
section
202D.11.
The
29
affidavit
shall
be
sworn
to
by
the
affiant
before
an
individual
30
who
has
authority
to
administer
the
oath.
31
(2)
Accept
petitions
or
public
comment
submitted
by
32
interested
persons,
that
includes
evidence
that
a
person
is
33
a
dominant
retailer
acting
or
not
acting
in
violation
of
34
section
202D.11.
The
evidence
shall
be
admitted
using
the
same
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standard
as
provided
in
section
17A.4.
1
b.
Within
thirty
days
of
accepting
all
evidence
described
in
2
paragraph
“a”
,
the
attorney
general,
in
consultation
with
the
3
department,
shall
make
a
final
decision
as
to
whether
a
person
4
is
a
dominant
retailer
acting
in
violation
of
section
202D.11.
5
The
attorney
general’s
final
decision
constitutes
final
agency
6
action
under
chapter
17A,
and
the
person
may
seek
judicial
7
review
of
such
agency
action
pursuant
to
section
17A.19.
8
4.
Notwithstanding
subsection
3,
a
person
included
on
9
the
preliminary
list
as
provided
in
subsection
2
may
demand
10
a
contested
case
proceeding
as
provided
in
chapter
17A
to
11
determine
the
question
of
whether
the
person
is
a
dominant
12
retailer
acting
in
violation
of
section
202D.11.
The
attorney
13
general’s
final
decision
constitutes
final
agency
action
under
14
chapter
17A
and
the
person
may
seek
judicial
review
of
such
15
agency
action
pursuant
to
section
17A.19.
16
5.
The
attorney
general
shall
publish
a
final
list
of
the
17
name
and
address
of
each
person
that
the
attorney
general
has
18
determined
to
be
a
dominant
retailer
acting
in
violation
of
19
section
202D.11.
A
person
shall
not
be
included
on
the
final
20
list
until
after
the
time
that
the
person’s
right
to
seek
21
judicial
review
has
expired
or
after
all
judicial
review
of
the
22
person’s
rights
has
been
exhausted,
and
the
attorney
general’s
23
final
decision
has
been
upheld.
The
final
list
shall
be
posted
24
on
the
attorney
general’s
internet
site.
25
Sec.
7.
NEW
SECTION
.
202D.14
Compliance.
26
1.
Not
later
than
thirty
days
after
the
attorney
general
27
publishes
a
final
list
that
includes
the
name
of
a
person
who
28
the
attorney
general
has
determined
to
be
a
dominant
retailer
29
acting
in
violation
of
section
202D.11,
the
person
must
submit
30
a
compliance
plan
to
the
attorney
general
for
approval
by
the
31
attorney
general
acting
in
cooperation
with
the
department.
32
The
compliance
plan
shall
specify
how
the
dominant
retailer
33
will
do
all
of
the
following:
34
a.
Divest
itself
of
any
interest
in
a
processor
owned
or
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controlled
by
the
dominant
retailer.
1
b.
Relinquish
any
interest
in
a
contract
entered
into
with
2
a
producer.
3
2.
a.
A
person
whom
the
attorney
general
has
determined
to
4
be
a
dominant
retailer
acting
in
violation
of
section
202D.11
5
included
on
the
final
list
described
in
subsection
1
of
this
6
section
must
comply
with
section
202D.11
within
one
year
from
7
the
date
the
final
list
is
published.
8
b.
Notwithstanding
paragraph
“a”
,
the
attorney
general
9
may,
upon
request
of
the
person
described
in
paragraph
“a”
,
10
extend
the
date
of
compliance
by
one
hundred
eighty
days
if
the
11
attorney
general
determines
that
the
person
is
acting
in
good
12
faith
to
complete
the
compliance
plan.
The
attorney
general
13
may
base
the
decision
to
extend
the
period
for
compliance
on
14
criteria
established
by
the
attorney
general.
15
Sec.
8.
NEW
SECTION
.
202D.15
Injunctive
relief.
16
The
attorney
general
or
a
county
attorney
may
apply
to
the
17
district
court
for
injunctive
relief
in
order
to
restrain
a
18
person
from
acting
in
violation
of
this
chapter.
19
Sec.
9.
NEW
SECTION
.
202D.16
Civil
penalty.
20
A
person
who
violates
a
provision
of
this
chapter
or
rules
21
adopted
or
orders
issued
under
this
chapter
is
subject
to
22
a
civil
penalty
of
fifty
thousand
dollars.
Each
day
of
a
23
violation
constitutes
a
separate
offense.
Moneys
imposed,
24
assessed,
and
collected
by
the
attorney
general
will
be
25
credited
to
the
general
fund
of
the
state.
26
Sec.
10.
NEW
SECTION
.
202D.17
Criminal
offenses.
27
1.
Except
as
provided
in
subsection
2,
a
person
who
28
knowingly
violates
a
provision
of
this
chapter
or
rules
adopted
29
or
orders
issued
under
this
chapter
commits
a
class
“D”
felony.
30
2.
A
person
who
falsely
swears
to
a
fact
by
an
affidavit
31
required
in
section
202D.13
commits
perjury
under
section
32
720.2.
33
Sec.
11.
NEW
SECTION
.
202D.21
Health
and
safety
program.
34
1.
a.
The
department
shall
establish
and
administer
a
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program
for
processors
who
comply
with
fair
labor
practices
1
with
financial
incentives
to
support
health
and
safety
2
practices
for
their
employees.
3
b.
As
used
in
paragraph
“a”
,
“fair
labor
practices”
includes
4
a
processor’s
commitment
to
bargain
with
unions
or
associations
5
representing
the
processor’s
employees.
6
2.
The
department
shall
implement
this
program
when
the
7
general
assembly
appropriates
moneys
required
to
support
its
8
administration
of
a
health
and
safety
program
to
be
implemented
9
by
participating
processors.
10
Sec.
12.
CODE
EDITOR
DIRECTIVE.
The
Code
editor
shall
11
divide
chapter
202D,
as
enacted
in
this
Act,
into
subchapters
12
and
shall
designate
sections
202D.1
through
202D.10
as
13
subchapter
I,
sections
202D.11
through
202D.20
as
subchapter
14
II,
and
section
202D.21
as
subchapter
III.
15
EXPLANATION
16
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
17
the
explanation’s
substance
by
the
members
of
the
general
assembly.
18
GENERAL.
This
bill
creates
new
Code
chapter
202D,
19
providing
for
the
processing
and
marketing
of
meat
and
poultry
20
products.
The
new
Code
chapter
is
divided
into
subchapter
21
I,
which
includes
general
provisions
including
definitions,
22
subchapter
II,
which
prohibits
certain
retailers
of
food
items
23
from
engaging
in
vertical
integration,
and
subchapter
III,
24
which
provides
a
health
and
safety
program
for
participating
25
processors.
26
FINDINGS
AND
DECLARATION.
The
bill
finds
that
concentration
27
in
the
meat
industry
has
materially
impaired
competition,
28
eroding
the
bargaining
power
of
Iowa
farmers,
independent
29
processors,
and
workers,
while
foreclosing
market
access
30
through
captive
supply
arrangements,
vertical
integration,
and
31
dominant
retailer
ownership
of
meat
processing
facilities.
32
The
bill
declares
the
necessity
to
extend
state
enforcement
33
mechanisms
to
further
deter
the
specific
threat
posed
by
34
dominant
retailer
ownership
of
meat
processing
facilities
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within
this
state.
1
TERMS.
Under
the
bill,
a
dominant
retailer
is
a
person
2
that
meets
one
of
two
criteria:
(1)
has
annual
retail
sales
3
of
covered
goods
exceeding
$18
billion
or
(2)
operates
at
4
least
one
storefront
or
distribution
center
located
in
more
5
than
20
states,
including
this
state.
A
covered
good
includes
6
grocery
items,
but
excludes
motor
fuel,
prescription
drugs,
7
tobacco
products,
or
alcoholic
beverages.
A
processor
is
an
8
establishment
engaging
in
the
slaughter
or
preparation
of
meat
9
or
poultry
products.
A
producer
is
a
person
that
has
a
legal
10
interest
in
land
or
a
facility
where
livestock
or
poultry
are
11
produced.
12
PROHIBITION
ON
VERTICAL
INTEGRATION
——
GENERAL.
The
13
bill
prohibits
a
dominant
retailer
from
engaging
in
vertical
14
integration
that
includes
(1)
owning
or
controlling
a
processor
15
or
(2)
entering
into
an
exclusive
contract
with
a
producer
16
that
requires
the
sale
of
meat
or
poultry
only
to
the
dominant
17
retailer
or
a
processor
controlled
by
the
dominant
retailer.
18
PROHIBITION
ON
VERTICAL
INTEGRATION
——
ADMINISTRATION
OR
19
ENFORCEMENT.
The
bill
is
administered
by
the
attorney
general
20
in
consultation
with
the
department
of
agriculture
and
land
21
stewardship
(DALS).
The
attorney
general
must
investigate
22
which
dominant
retailers
are
engaging
in
vertical
integration.
23
Every
two
years
the
attorney
general
must
conduct
an
inquiry
24
and
make
a
preliminary
determination
regarding
whether
a
person
25
is
a
dominant
retailer
acting
in
violation
of
the
bill’s
26
provisions
prohibiting
vertical
integration.
The
attorney
27
general
must
make
a
determination
based
on
evidence
submitted
28
by
the
person
and
interested
persons.
The
evidence
may
include
29
an
affidavit
form
signed
by
an
authorized
individual
stating
30
that
a
retailer
is
not
a
dominant
retailer
acting
in
violation
31
of
the
bill.
However,
a
person
subject
to
the
inquiry
may
32
instead
demand
a
contested
case
proceeding
to
decide
the
matter
33
under
the
Iowa
administrative
procedure
Act
(Code
chapter
17A).
34
In
any
case,
the
person
has
a
right
to
seek
judicial
review
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of
the
attorney
general’s
final
decision.
If
the
attorney
1
general’s
final
decision
is
not
overruled,
the
attorney
general
2
must
include
the
name
of
the
dominant
retailer
on
a
list
posted
3
on
the
attorney
general’s
internet
site.
4
PROHIBITION
ON
VERTICAL
INTEGRATION
——
COMPLIANCE.
A
5
dominant
retailer
determined
to
be
engaged
in
vertical
6
integration
must
submit
a
compliance
plan
to
the
attorney
7
general
specifying
how
the
dominant
retailer
will
comply
with
8
the
law,
including
by
divesting
an
interest
in
a
processor
or
9
relinquishing
an
interest
in
a
contract
with
a
producer.
The
10
attorney
general
may
apply
to
the
district
court
for
injunctive
11
relief
in
order
to
restrain
a
person
from
acting
in
violation
12
of
the
bill.
13
PROHIBITION
ON
VERTICAL
INTEGRATION
——
CIVIL
PENALTY.
14
A
person
who
violates
a
provision
of
the
bill
prohibiting
15
vertical
integration
is
subject
to
a
civil
penalty
of
$50,000.
16
Each
day
that
a
violation
continues
constitutes
a
separate
17
offense.
18
PROHIBITION
ON
VERTICAL
INTEGRATION
——
CRIMINAL
PENALTIES.
19
A
person
who
knowingly
violates
a
provision
of
the
bill
commits
20
a
class
“D”
felony.
A
person
who
falsely
swears
to
a
fact
by
an
21
affidavit
commits
perjury
and
is
also
subject
to
a
class
“D”
22
felony.
A
class
“D”
felony
is
punishable
by
confinement
for
no
23
more
than
five
years
and
a
fine
of
at
least
$1,025
but
not
more
24
than
$10,245.
25
HEALTH
AND
SAFETY
PROGRAM.
The
bill
requires
DALS
to
26
establish
and
administer
a
program
for
a
processor
that
27
complies
with
fair
labor
practices.
A
participating
processor
28
may
be
awarded
financial
incentives
to
support
health
29
and
safety
practices
for
the
processor’s
employees.
The
30
department
must
implement
the
program
when
the
general
assembly
31
appropriates
moneys
required
to
support
its
administration.
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