Providing for the processing and marketing of meat and poultry products, including by prohibiting vertical integration, providing for a health and safety program, and providing for the divestiture of interests in processors by certain retailers, and providing penalties

GENERAL. This bill creates new Code chapter 202D, providing for the processing and marketing of meat and poultry products. The new Code chapter is divided into subchapter I, which includes general provisions including definitions, subchapter II, which prohibits certain retailers of food items from engaging in vertical integration, and subchapter III, which provides a health and safety program for participating processors. TERMS. Under the bill, a dominant retailer is a person that meets one of two criteria: (1) has annual retail sales of covered goods exceeding $18 billion or (2) operates at least one storefront or distribution center located in more than 20 states, including this state. A covered good includes grocery items, but excludes motor fuel, prescription drugs, tobacco products, or alcoholic beverages. A processor is an establishment engaging in the slaughter or preparation of meat or poultry products. A producer is a person that has a legal interest in land or a facility where livestock or poultry are produced. PROHIBITION ON VERTICAL INTEGRATION —— GENERAL. The bill prohibits a dominant retailer from engaging in vertical integration that includes (1) owning or controlling a processor or (2) entering into an exclusive contract with a producer that requires the sale of meat or poultry only to the dominant retailer or a processor controlled by the dominant retailer. PROHIBITION ON VERTICAL INTEGRATION —— ADMINISTRATION OR ENFORCEMENT. The bill is administered by the attorney general in consultation with the department of agriculture and land stewardship (DALS). The attorney general must investigate which dominant retailers are engaging in vertical integration. Every two years the attorney general must conduct an inquiry and make a preliminary determination regarding whether a person is a dominant retailer acting in violation of the bill’s provisions prohibiting vertical integration. The attorney general must make a determination based on evidence submitted by the person and interested persons. However, a person subject to the inquiry may instead demand a contested case proceeding to decide the matter under the Iowa administrative procedure Act (Code chapter 17A). In any case, the person has a right to seek judicial review of the attorney general’s final decision. If the attorney general’s final decision is not overruled, the attorney general must include the name of the dominant retailer on a list posted on the attorney general’s internet site. PROHIBITION ON VERTICAL INTEGRATION —— COMPLIANCE. A dominant retailer determined to be engaged in vertical integration must submit a compliance plan to the attorney general specifying how the dominant retailer will comply with the law, including by divesting an interest in a processor or relinquishing an interest in a contract with a producer. The attorney general may apply to the district court for injunctive relief in order to restrain a person from acting in violation of the bill. PROHIBITION ON VERTICAL INTEGRATION —— CIVIL PENALTY. A person who violates a provision of the bill prohibiting vertical integration is subject to a civil penalty of $25,000. Each day that a violation continues constitutes a separate offense. HEALTH AND SAFETY PROGRAM. The bill requires DALS to establish and administer a program for a processor that complies with fair labor practices. A participating processor may be awarded financial incentives to support health and safety practices for the processor’s employees. The department must implement the program when the general assembly appropriates moneys required to support its administration.