Stakeholders Debate Competition in the Poultry Industry at USDA/DOJ Workshop
It’s been a couple weeks since chicken farmers and processors met with Secretary of Agriculture Tom Vilsack and Attorney General Eric Holder in Normal, Alabama to discuss competition in the poultry industry. The May 21 USDA/DOJ workshop was the second such meeting conducted by the agencies in their quest to review enforcement policy relating to competition in agriculture. The meeting certainly highlighted the fact that there is debate among stakeholders in the industry about the state of competition, healthy or not.
Several sources noted with great interest that Christine Varney, DOJ’s Assistant Attorney General in charge of the Antitrust Division, asked one poultry farmer to call her directly if he experienced intimidation from poultry processors. The farmer declared that he was concerned to appear in public speaking about the way poultry “integrators” contract with poultry farmers like himself, who actually raise chicks into broilers. The recently published transcript of the May 21 proceedings also contains a farmer’s anonymous statement that was read to the government lawyers by a farmer willing to speak on his colleague’s behalf.
From a policy perspective, there was more to the May 21 workshop than fear and loathing. For example, Assistant Attorney General Varney asked about the prevalence of farmer cooperatives in the industry – to which farmers on the panel replied that poultry farmers do not generally work together in cooperatives. Large poultry integrators, therefore, deal with poultry farmers on a one-on-one basis. And as one can read in the transcript, poultry farmers present in Normal, Alabama generally felt that the large poultry “integrators” have too much power over them. Outside the context of the workshop, Poultry farmers recently sued processors for their alleged unfair practices, without success. On May 10, a federal appeals court upheld the dismissal of claims against Tyson Foods, because the poultry farmers failed to allege that the challenged tactics actually harmed competition – i.e., reduced output or increased prices.
That brings us back to Assistant Attorney General Varney’s question about the prevalence of farmer cooperatives. Because the Capper-Volstead Act enables farmers to band together and jointly negotiate with the large buyers without violating Section One of the Sherman Act, farmers could theoretically deal with poultry processors through a collective or cooperative organization.
Leading up to the meeting, large-scale poultry producers prepared themselves for criticism from farmers. The National Chicken Council released a report by an agricultural economist that describes healthy, vigorous competition in the poultry industry. And while chicken farmers at the workshop complained about the “power” of large poultry integrators, the National Chicken Council report cited a 2001 study that found farmers were generally happy to raise chickens for integrators. Interestingly, the report also reviewed government reports that show much higher levels of concentration among beef and pork processors relative to the poultry industry, and the report showed modest declines in retail prices for chicken products over the past 18 years.
What’s the takeaway from this round of the USDA/DOJ meetings? It’s hard to say. As a general rule, the antitrust enforcement agencies hate to argue with falling consumer prices. But the transcript reveals certain concerns about the power of poultry integrators over the farmers. Though the government’s listening tour clearly shows that government lawyers from USDA and DOJ are listening, it’s not clear yet what they are thinking. Watch for more clues at the June 25 workshop in Madison, Wisconsin, when the DOJ and USDA will be examining competition in the dairy industry.
Levine v. Vilsack: The Ninth Circuit Rules the Humane Methods of Slaughter Act Provides No Remedy
When Congress passes a statute and the Secretary of Agriculture issues a notice in the Federal Register interpreting the statute, it might seem self-evident that someone who believes that interpretation is wrong can appeal that interpretation in court and get a judgment on the merits. On November 18, the Ninth Circuit Court of Appeals said "not so fast."
The decision is a valuable reminder that just because you might allege a wrong, you will not necesarily be entitled to a remedy. The Ninth Circuit does a good job of making sure that the threshold question of standing must be answered satisfactorily before any other allegations in a complaint are reached. When, as here, it finds it not satisfied, the case is over.
The case was Levine v. Vilsack, and it involved what seemed at first a straightforward issue of statutory interpretation. The Humane Methods of Slaughter Act of 1958 ("HMSA of 1958") is the bedrock federal statute dealing with the means of slaughter of livestock. The key provision of the act, 7 U.S.C. Section 1902, provides as follows:
No method of slaughtering or handling in connection with slaughtering shall be deemed to comply with the public policy of the United States unless it is humane. Either of the following two methods of slaughtering and handling are hereby found to be humane:
(a) in the case of cattle, calves, horses, mules, sheep, swine, and other livestock, all animals are rendered insensible to pain by a single blow or gunshot or an electrical, chemical or other means that is rapid and effective, before being shackled, hoisted, thrown, cast, or cut; or
(b) by slaughtering in accordance with the ritual requirements of the Jewish faith or any other religious faith . . . .
The simple question presented in Levine was whether the phrase bolded above, "and other livestock", included fowl. Almost from the time the statute was first enacted, and most recently in 2005, the Secretary of Agriculture ruled that it did not. Levine along with a host of other plaintiffs, including The Humane Society of the United States, sued to overturn this interpretation.
The district court dismissed the case, treating it as a relatively straightforward case of statutory interpretation and agency discretion. The Ninth Circuit (perhaps wary of Justice Scalia's well-known dislike of legislative history) took a different tack.
The issue it confronted is in general known as standing. It derives from Article III of the Constitution, which grants the judiciary the power to decide "cases" and "controversies." The Ninth Circuit relied on a U.S. Supreme Court case called Lujan v. Defenders of Wildlife and its own decision in Salmon Spawning & Recovery Alliance v. Gutierrez to apply a three-part test to the standing issue in Levine.
(1) that plaintiffs had suffered an injury in fact that was concrete and particularized, and actual or imminent; (2) that the injury is fairly traceable to the challenged conduct; and (3) that the injury was likely to be redressed by a favorable court decision
It was on the third of these tests, whether the alleged injury was likely to be redressed by a favorable court decision, that plaintiffs' claims fell.
The problem lies in the statutory history of the HMSA of 1958 and a companion statute, the Federal Meat Inspection Act (the "FMIA"). Initially, the HMSA of 1958 had a enforcement provision in that the federal government was prohibited from buying meat that was not slaughtered in accordance with its terms. However, in 1978, Congress passed a new Humane Methods of Slaughter Act ("HMSA of 1978"), which repealed that provision of HMSA of 1958. As part of HMSA of 1978, Congress also amended the FMIA (initially passed in 1907 in reaction to Upton Sinclar's "The Jungle") to provide inspection requirements for slaughtering. Essentially, those inspection requirements became the replacement enforcement mechanism for the HMSA of 1958. But inspection requirements under the FMIA applied only to "cattle, sheep, swine, goats, horses, mules, and other equines." Without the "other livestock" language of HMSA of 1958, there was no argument that the FMIA inspection requirement could conceivably apply to poultry. However, in 2005, the FMIA was amended once again, deleting the specific list of animals and replacing it with the phrase "amenable species." As the court noted,
Amenable species was defined to include “those species subject to the provisions of this chapter on the day before November 10, 2005" as well as "any additional species of livestock that the Secretary considers appropriate."
Plaintiffs ultimate difficulty, the one they could not overcome, was that they sued for an interpretation under HMSA of 1958, and not to require or overturn agency action interpreting the phrase "amenable species" under the FMIA. As a result, regardless of the harms they claimed and regardless of the proper interpretation of "other livestock" under HMSA of 1958, there was no remedy the court could order for them based on the actual claims in their complaint.
The plaintiffs tried a lot of arguments to avoid this result. In a footnote (it's footnote 8 that continues over pages 15456-67 of the case), the court deals with the plaintiffs' argument that "if she prevailed, 'the number of chickens and other birds slaughtered inhumanely will be reduced, thus decreasing her risk of contracting food-borne illness . . . .'” The court points to other statutes that allow federal inspectors to reduce food-borne illness in poultry slaughterhouses. But it returns to the main point, which is that it has no power to order the Secretary to make a ruling under one statute when the complaint asks for relief under a different statute.
In federal court, standing is the gatekeeper of issues. Without standing under Article III, without being a party that has a real case or controversy in accordance with precedent, no case can proceed. In Levine, the plaintiffs tried unsuccessfully to straddle the gap between two statutes, as to one of which it claimed an incorrect agency interpretation, but under the other of which it would have had to look for relief. It was right of the Ninth Circuit not to give it a helping hand out of that gap.
Michigan Company Announces Frozen Pasta Recall
A Michigan maker of frozen pasta products has issued a recall for products that were distributed to seven states. Canton, Mich.-based Mucci Food Products is recalling an undetermined amount of frozen meat and poultry pasta products because the food was prepared without federal inspection.
The products were produced from May 1, 2008 to April 24, 2009 and distributed to California, Florida, Georgia, Illinois, Michigan, Missouri, and Ohio. The recalled products bear the establishment number “19177” or “P-19177” inside the USDA mark of inspection and the dates “1218” to “1149” located at the bottom of the product box.
The U.S. Department of Agriculture’s Food Safety and Inspection Service has complete details of the products subject to the recall, including images of the product labels. The USDA has not received any reports of illness as a result of consumption of the products.
What to Do When the Investigators Knock . . .
This week brought news of yet another nationwide Salmonella outbreak from a source not yet identified by government regulators. The last time we had a nationwide Salmonella outbreak for an extended period of time without identification of a definitive source the federal government initially singled out tomatoes imported from Mexico (a huge array of products). In that case, the government was wrong and wreaked financial havoc on many farmers and businesses.
So far, in the current outbreak, nothing more specific than “poultry, eggs and cheese” have been identified as possible sources. Last year’s outbreak involved Salmonella Saintpaul whereas the current outbreak is Salmonella Typhimurium, which is more commonly associated with poultry, eggs and cheese, but could come from almost anything.
That a source has yet to be identified to the media doesn’t mean that state and federal officials aren’t zeroing in on possible sources. Restaurant owners, retailers and food manufacturers should be ready for the regulators when they come knocking.
In the past, I’ve had clients who were worked over aggressively by regulators (especially federal officials) who were investigating a large, nationwide outbreak with an uncertain cause. These officials face enormous pressure from those in Washington and from the public. Federal officials can make demands that threaten an entire business. They can demand credit card receipts, contact information for customers, personal employee information, shutdown of the business and more. Noncompliance might mean the officials will go to the press and advertise that the business is a target of the investigation. Unlike local health officials, who are usually vested in the well-being of local food producers under their jurisdiction, federal officials may care only about the investigation and nothing else.
Any food business should implement its crisis response team the minute it suspects it could be targeted in an investigation like the one that is currently ongoing. Specialists in food safety and foodborne illness investigations, genetic microbiologists, public relations experts, accountants, quality assurance personnel, purchasing personnel and lawyers should be lined up and ready to go. Events may unfold quickly for your business (over the course of a day or even a morning). Everything needs to be done at that moment to assist a business in navigating what may appear to be an impossible crisis.
Is It Really A Food-Borne Illness?
At a recent presentation, Dr. Alan Melnick, a public health officer in both Oregon and Washington, provided a useful list of alternative causes of symptoms to consider when someone claims a food-borne illness. Other causes of symptoms that might be confused for food-borne illness include (but may not be limited to):
- Irritable bowel syndrome (IBS)
- Inflammatory bowel disease
- Malignancies
- Antibiotic use
- Gastro-intestinal surgery or radiation
- Malabsorption syndromes
- Immune deficiency
Another practical piece of advice offered by Dr. Melnick: When assessing a food-borne illness claim, determine whether the incubation period is compatible with the illness. Incubation periods (along with other useful information) were provided by Dr. Melnick (relying upon the CDC) as follows:
|
Pathogen |
Incubation |
Symptoms |
Duration |
Source |
| Bacillus cereus |
1-6 hours (vomiting); 6-24 hours (diarrhea) |
Nausea and vomiting or colic and diarrhea | 24 hours (short form); 24-48 hours (long form) | Soil organism found in raw, dry and processed foods, e.d. rice |
| Campylobacter | 2-10 days; usually 2-5 days | Diarrhea, cramps, fever and vomiting; diarrhea may be bloody | 2-10 days | Raw and undercooked poultry, unpasteurized milk, water |
| Clostridium botulinum (botulism) | 2 hours to 8 days; usually 12-48 hours | Vomiting, diarrhea, blurred vision, double vision, difficulty swallowing, descending muscle weakness | Variable (days to months) | Home-canned food, improperly canned commercial foods |
| Clostridium perfringens | 6-24 hours | Cramps, diarrhea | 24-48 hours | Meats, poultry, gravy; foods kept warm |
| Enterro-hemorrhagic E. coli, including E. coli O157:H7 and other Shiga toxin-producing E. coli (STEC) | 1-10 days; usually 3-4 days | Diarrhea, frequently bloody; abdominal cramps (often severe); little or no fever; 5-10% develop Hemolytic-uremic syndrome (HUS) and average of 7 days after onset, when diarrhea is improving (more common in children, elderly and immune-compromised) | 5-10 days | Ground beef, unpasteurized milk and juice, raw fruits and vegetables, contaminated water, sprouts, person to person |
| Listeria | 9-48 hours for GI symptoms; 2-6 weeks for invasive disease | Fever, muscle aches and nausea or diarrhea; pregnant women may have flu-like illness and stillbirth; elderly, immune-compromised and infants infected from mother can get sepsis and meningitis | Variable | Fresh soft cheeses, unpasteurized or inadequately pasteurized milk, ready-to eat deli meats and hot dogs |
| Salmonella | 6 hours to 10 days; usually 5-48 hours | Nausea, diarrhea, cramps, fever | 4-7 days | Poultry, eggs, meat, unpasteurized milk or juice, raw fruits and vegetables (e.g., sprouts), person to person |
| Shigella | 12 hours to 6 days; usually 2-4 days | Abdominal cramps, fever and diarrhea; stool may contain blood and mucus | 4-7 days | Contaminated food or water, raw foods touched by food workers, raw vegetables, egg salads, person to person |
| Staph (toxin) | 30 minutes to 8 hours; usually 2-4 hours | Nausea, cramps, vomiting, diarrhea | 24-48 hours | Custards, cream fillings, potato or egg salad, sliced meats |
| Vibrio cholerae | 1-5 days | Profuse watery diarrhea and vomiting, severe dehydration | 3-7 days | Contaminated water and shellfish, street vended food |
| Vibrio parahaemolyticus | 4-30 hours | Watery diarrhea, abdominal cramps, nausea, vomiting | 2-5 days | Undercooked or raw seafood (fish and shellfish) |
| Vibrio vulnificus | 1-7 days | Vomiting, diarrhea, abdominal pain; more severe in patients with liver disease or who are immune-compromised; can cause invasive infection (sepsis) | 2-8 days | Raw seafood, particularly oysters, harvested from warm coastal waters |
| Yersinia | 1-10 days; usually 4-6 days | Appendicitis-like symptoms (diarrhea and vomiting, abdominal pain) | 1-3 weeks | Undercooked pork, unpasteurized milk, contaminated water |
2009 Priorities for USDA in Food Safety
I just returned from ACI’s Second National Forum on Food-Borne Illness, which included several interesting presentations and discussions. One was by Dan Engeljohn, Deputy Assistant Administrator of the Office of Policy and Program Development at the Food Safety and Inspection Service (“FSIS”). Mr. Engeljohn spoke about FSIS’s priorities for “2009 and beyond.” Takeaways from this presentation include:
Non-O157 STECs
FSIS is increasingly concerned with strains of E. coli other than O157:H7. Non-O157:H7 strains such as E.coli O121:H19 and O111 are growing more prevalent in the environment. FSIS is putting additional resources into developing methodology for detection of non-O157 STECs.
As FSIS, CDC, FDA and local health departments develop this methodology, the industry can expect more reported outbreaks and more liability exposure. Most experts believe that many non- O157:H7 outbreaks go undetected. Increased focus on detection of non-O157 E. coli strains is yet another reason to examine the sufficiency of your companies' insurance limits.
Frozen, Not Ready to Eat Meals
According to Mr. Engeljohn, because of recent salmonella scares, FSIS remains concerned about “frozen, not ready to eat” meals and specifically “frozen, not ready to eat” poultry meals. He explained that “evidence is mounting that these products cannot be safely prepared unless salmonella is controlled in the source materials.” In other words, FSIS now believes that no amount of package labeling or consumer education can prevent consumers from undercooking these meals.
FSIS jurisdiction over salmonella in poultry is limited. FSIS attempts restrict the sale of “frozen, not ready to eat” meals or impose more stringent standards against salmonella in poultry may be a reach for the agency. As discussed in Supreme Beef Processors v. USDA Salmonella, "is not an adulterant per se, meaning its presence does not require the USDA to refuse to stamp such meat 'inspected and passed.'" Absent statutory reform, FSIS action in this area may be challenged.
Listeria
Mr. Engeljohn stated that FSIS is “deeply concerned” about listeria. It believes that gains made in recent years at meatpacking plants may be undone by problems at supermarket deli counters. FSIS believes that little is being done to address critical control points at the retail level, such as proper cleaning and sanitizing of meat slicers. FSIS may be exploring ways to exercise more jurisdiction to regulate supermarket delis.
