Packers and Stockyards Act
History and passage
As the outbreak of World War I occurred and the cost of living rose, President Woodrow Wilson ordered the FTC to investigate the industry from the "hoof to the table" to determine whether or not there were any "manipulations, controls, trusts, combinations, or restraints out of harmony with the law or the public interest."
The FTC reported packers were manipulating markets, restricting flow of foods, controlling the price of dressed meat, defrauding producers and consumers of food and crushing competition. The FTC, in fact, recommended governmental ownership of the stockyards and their related facilities.
The meat packing industry had also became a prime concern of Wilson's Attorney General Alexander Mitchell Palmer. After threatening an antitrust suit, in February 1920 Palmer managed to force the "Big Five" packers (Armour, Cudahy, Morris, Swift and Wilson) to agree to a consent decree under the Sherman Antitrust Act which drove the packers out of all non-meat production, including stockyards, warehouses, wholesale and retail meat.
Agitation for legislation to regulate the packers persisted into the Warren Harding administration despite the decree, and Congress passed the Packers and Stockyards Act on August 15, 1921 as H.R. 6320 and the law went into effect in September 1921.
The Act's purpose at the time it was passed was to "regulate interstate and foreign commerce in live stock, live-stock produce, dairy products, poultry, poultry products, and eggs, and for other purposes." It prohibited packers from engaging in unfair and deceptive practices, giving undue preferences to persons or localities, apportioning supply among packers in restraint of commerce, manipulating prices, creating a monopoly or conspiring to aid in unlawful acts. The Act also made stockyards quasi-public utilities and required yard officers, agents and employees to register with the government. Stockyards were forbidden from dealing in the livestock they handled, and required them to maintain accurate weights and measures and pay shippers promptly. However, not all stockyards were under the jurisdiction of the Act. Only those with pen space larger than twenty thousand square feet were regulated.
Today, the Act's scope has expanded to regulate the activity of livestock dealers, market agencies, live poultry dealers and swine contractors as well as meatpackers.
In Stafford v. Wallace (1922), it was argued that the act was unconstitutional, since it exceeded the powers granted to the federal government. The Supreme Court, however, ruled that the regulation was licensed by the Commerce Clause, and was therefore constitutional.
The Act has been updated several times to keep pace with a changing and dynamic industry.
The first major amendment to the Act was in 1958, when Congress expanded the jurisdiction of the United States Department of Agriculture (USDA) to include all auction markets operating in commerce. Before 1958, only auction markets with an area of 20,000 square feet (1,858 m2) or more were covered. In addition, jurisdiction over market agencies and dealers was expanded to include all of their livestock activities in commerce, including those away from stockyards.
In 1976, the Act was amended to increase financial protection to livestock producers and to expand USDA jurisdiction. This amendment:
- required meat packers with annual livestock purchases of over $500,000 to be bonded;
- provided trust protection for producers in the event of nonpayment for livestock by a meat packer;
- expanded USDA's jurisdiction over wholesale brokers, dealers, and distributors marketing meat in commerce and
- authorized the Agency to assess civil penalties of not more than $10,000 per violation.
In subsequent legislation that amount was increased to $11,000 for packers, swine contractors, stockyard owners, market agencies, or dealers, and $27,000 for live poultry dealers.
In 1987, the Act was amended to provide trust protection to live poultry sellers and contract growers in the event of nonpayment for poultry by live poultry dealers and in 2000 it was amended to require P&SP to perform an annual assessment of the cattle and hog industries.
The Farm Security and Rural Investment Act of 2002 (2002 Farm Bill) amended the Act to regulate certain activities of swine contractors who enter into swine production contracts with contract growers.
In general, the amendment made swine contractors subject to certain provisions of the Packers and Stockyards Act. The amendment prohibited certain activities of swine contractors, required swine contractors to maintain certain records, and held them responsible for the acts of their employees, officers, and agents. The amendment also gave swine production contract growers the right to sue swine contractors in federal district court. The amendment did not impose any new bonding or registration requirements, establish a trust for swine production contract growers, or establish any prompt payment requirements for swine contractors.
The P&S Act is administered by the Grain Inspection, Packers and Stockyards Administration (GIPSA) of the U.S. Department of Agriculture.