Proposed Rule2026-05330
Poultry Grower Payment Systems and Capital Improvement Systems; Delay of Effective Date
Primary source
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Published
March 18, 2026
Issuing agencies
Agriculture DepartmentAgricultural Marketing Service
Abstract
The Agricultural Marketing Service (AMS or the Agency) is proposing to delay the effective date of the Poultry Grower Payment Systems and Capital Improvement Systems final rule published in the Federal Register on January 16, 2025, to allow time for further consideration of possible actions that may be taken regarding the disposition of the rule. The current effective date is July 1, 2026. AMS is proposing to delay the effective date to December 31, 2027.
Full Text
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<title>Federal Register, Volume 91 Issue 52 (Wednesday, March 18, 2026)</title>
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[Federal Register Volume 91, Number 52 (Wednesday, March 18, 2026)]
[Proposed Rules]
[Pages 12936-12942]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-05330]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 91, No. 52 / Wednesday, March 18, 2026 /
Proposed Rules
[[Page 12936]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
9 CFR Part 201
[Doc. No. AMS-FTPP-22-0046]
RIN 0581-AE54
Poultry Grower Payment Systems and Capital Improvement Systems;
Delay of Effective Date
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed delay of effective date; request for comments.
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SUMMARY: The Agricultural Marketing Service (AMS or the Agency) is
proposing to delay the effective date of the Poultry Grower Payment
Systems and Capital Improvement Systems final rule published in the
Federal Register on January 16, 2025, to allow time for further
consideration of possible actions that may be taken regarding the
disposition of the rule. The current effective date is July 1, 2026.
AMS is proposing to delay the effective date to December 31, 2027.
DATES: Comments on this proposed rule must be received on or before
April 17, 2026.
ADDRESSES: Comments can be submitted through the Federal e-rulemaking
portal at <a href="https://www.regulations.gov">https://www.regulations.gov</a> and should reference the docket
number and the date and page number of this issue of the Federal
Register. AMS prefers comments be submitted electronically. However,
written comments may be submitted (i.e., postmarked) via mail to Docket
No. AMS-FTPP-22-0046, Jeana Harbison, Acting Director, Packers and
Stockyards Division, USDA, AMS, FTPP Room 2097-S, Mail Stop 3601, 1400
Independence Ave. SW, Washington, DC 20250-3601. All comments submitted
in response to this proposed action will be included in the record and
will be made available to the public. Please be advised the identity of
individuals or entities submitting comments will be made public on the
internet at the address provided above. Parties who wish to comment
anonymously may do so by entering ``N/A'' in the fields identifying the
commenter. Comments are posted to <a href="http://regulations.gov">regulations.gov</a> as submitted, without
change. As required by 5 U.S.C. 553(b)(4), a plain language summary of
the proposed rule is also available on the Federal e-rulemaking portal.
FOR FURTHER INFORMATION CONTACT: Jeana Harbison, Acting Director,
Packers and Stockyards Division, USDA, AMS, Fair Trade Practices
Program, 1400 Independence Ave. SW, Washington, DC 20250; telephone:
202-720-7051; email: <a href="/cdn-cgi/l/email-protection#3e745b5f505f107310765f4c5c574d51507e4b4d5a5f10595148"><span class="__cf_email__" data-cfemail="f1bb94909f90dfbcdfb990839398829e9fb184829590df969e87">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
A. Background
On January 16, 2025, AMS published the final rule, ``Poultry Grower
Payment Systems and Capital Improvement Systems'' (Payment Systems rule
or final rule) (90 FR 5146, January 16, 2025,), to amend 9 CFR part 201
of its regulations under the Packers and Stockyards Act (P&S Act) (7
U.S.C. 181 et seq.). The final rule was promulgated in support of
Executive Order 14036 (86 FR 36987, July 14, 2021), which Executive
Order 14337 revoked on August 13, 2025 (90 FR 40227, August 19, 2025).
The final rule: (1) prohibits livestock poultry dealers (LPDs) from
reducing a grower's compensation based on the grower's ranking under a
poultry grower ranking system; (2) establishes a presumptive violation
of the P&S Act by LPDs when aggregate gross annual payments based upon
a grower's ranking under a poultry grower ranking system exceeds a
certain threshold; (3) holds LPDs to a duty of fair comparison when
designing and operating their poultry grower ranking system and
requires documentation of compliance with that duty; and (4) requires
LPDs to provide certain disclosures when requesting or requiring that
broiler growers make additional capital investments.
At the time of publication, AMS estimated the final rule would
result in significant costs to both LPDs and poultry growers with no
quantifiable benefits.\1\ AMS acknowledged it could not rule out the
possibility of increased compliance costs, fewer growers participating
in the market, and/or reduced production efficiencies, all of which
could lead to higher consumer prices.\2\
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\1\ See ``Poultry Grower Payment Systems and Capital Improvement
Systems,'' 90 FR 5146, 5196, 5201, January 16, 2025.
\2\ See id. at 5198-9.
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In the explanatory statement accompanying the Continuing
Appropriations, Agriculture, Legislative Branch, Military Construction
and Veterans Affairs, and Extensions Act, 2026 (Pub. L. 119-37),\3\
Congress encouraged the Department to delay implementation of the final
rule.\4\
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\3\ Continuing Appropriations, Agriculture, Legislative Branch,
Military Construction and Veterans Affairs, and Extensions Act,
2026, Public Law 119-37, 139 Stat. 495 (November 12, 2025).
\4\ 171 Cong. Rec. S8047 (daily ed. November 9, 2025)
(Explanatory Statement Submitted by Ms. Collins, Chair of the Senate
Committee on Appropriations, Regarding H.R. 5371, the Continuing
Appropriations, Agriculture, Legislative Branch, Military
Construction and Veterans Affairs, and Extensions Act, 2026) (``The
agreement encourages the Department to delay implementation of the
final rule entitled `Poultry Grower Payment Systems and Capital
Improvement Systems', published by the Department of Agriculture in
the Federal Register on January 16, 2025 (90 FR 5146 et seq.).'')
---------------------------------------------------------------------------
In alignment with Congressional direction, and given the
significant estimated costs, and the policy and legal issues associated
with the final rule, AMS is seeking public comment on delaying the
effective date of the final rule to December 31, 2027, to allow for
thorough consideration of these matters.
B. Executive Order 12866
This proposed rule has been determined to be ``significant'' under
Executive Order 12866, as supplemented by Executive Orders 13563 and
14192, and, therefore, has been accordingly reviewed by the Office of
Management and Budget (OMB). As a required part of the regulatory
process, AMS prepared an economic analysis of the costs and benefits of
delaying the effective date of Sec. Sec. 201.106, 110, 112, and 290.
AMS proposes to delay the effective date of the Payment Systems
rule. The Payment Systems rule created four specific provisions
including: Sec. 201.106 regarding LPD responsibilities for the design
of broiler grower compensation arrangements; Sec. 201.110 regarding
the fair operation of broiler grower ranking systems; Sec. 201.112
regarding disclosure requirements for LPDs when requesting additional
capital investments from
[[Page 12937]]
broiler growers; and Sec. 201.290 regarding severability.
Reason for the Proposed Rule
AMS is proposing to delay the effective day of the Payment Systems
rule to allow for thorough consideration of estimated costs and the
policy and legal issues associated with the final rule.
When AMS finalized the Payment Systems rule, AMS explained there
was uncertainty as to whether the benefits would outweigh the costs.\5\
One factor that was difficult to determine was whether the provision
that prevents LPDs from applying performance discounts (Sec.
201.106(a)) and the provision capping variation in performance premiums
(Sec. 201.106(b)) would impact grower incentives. Research indicates
growers tend to raise broilers more efficiently with tournament
contracts than with other forms of contracts or when LPDs raise
broilers in their own facilities.\6\ However, there is no literature
addressing how growers' incentives might change if performance
discounts were not part of the tournament or if variability in
performance payments were limited. If changes to tournament contracts
due to the Payment Systems rule's amendments to subpart N result in
even very small decreases in feed efficiency, costs from implementation
of the amendments could be considerably larger than the value of the
benefits to growers due to reduced variability in compensation.
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\5\ See ``Poultry Grower Payment Systems and Capital Improvement
Systems,'' 90 FR 5202, January 16, 2025.
\6\ Knoeber, Charles R. and Walter N. Thurman. ``Testing the
Theory of Tournaments: An Empirical Analysis of Broiler
Production.'' Journal of Labor Economics 12 (April 1994). Levy,
Armando and Tomislav Vukina. ``The League Composition Effect in
Tournaments with Heterogeneous Players: An Empirical Analysis of
Broiler Contracts.'' Journal of Labor Economics 22 (2004).
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Benefit-Cost Analysis
AMS prepared an economic analysis of the costs and benefits of
delaying the effective date of Sec. Sec. 201.106, 110, 112, and 290.
AMS estimated cost and benefits associated with the Payment Systems
rule when it was made final in 2025. AMS provided quantitative
estimates of direct administrative costs associated with the Payment
Systems rule, and qualitative descriptions of indirect costs and
benefits. This analysis follows the same analytical approach used in
the final rule. AMS invites comments and data concerning the benefits
and costs of delaying the effective date of the Payment Systems rule.
The updated estimates incorporate the latest industry parameters
and wage rates while maintaining consistency with the methodology used.
Hourly wage rates were established using the following Bureau of Labor
Statistics (BLS) classifications for each labor category as follows
(NAICS Code--OCC code--OCC Title): Management (3116--11-1020--General
and Operations Managers) for live poultry dealers' managers, and Legal
(3110--23-1011--Lawyers) for attorneys.\7\ The average hourly wage
rates used to estimate cost savings were updated from the final rule to
include a 42.34 percent markup for benefits and are as follows:
Management--$102.56, Legal--$145.93, Administrative--$48.38, and
Information Technology--$101.72. For reference, the analysis in the
final rule is described in detail in the Federal Register at 90 FR 5146
(see pages 5189-5206).\8\
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\7\ U.S. Bureau of Labor Statistics, May 2024 National
Occupational Employment and Wage Estimates, May 2024, <a href="https://www.bls.gov/oes/special.requests/oesm24all.zip">https://www.bls.gov/oes/special.requests/oesm24all.zip</a>.
\8\ See ``Poultry Grower Payment Systems and Capital Improvement
Systems,'' 90 FR 5190, January 16, 2025.
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AMS expects that LPDs would incur $4.9 million in ongoing
administrative costs for each of the first four years after the Payment
Systems rule becomes effective and $4.1 million annually thereafter.
Poultry growers would have approximately $249,000 in ongoing quantified
administrative costs each year. Total ongoing administrative costs
would be $5.2 million for the four years and $4.3 million thereafter.
Regulatory Alternatives Considered
AMS considered three alternatives to the proposed delay of
Sec. Sec. 201.106, 110, 112, and 290. The first alternative is the
``do nothing'' approach or maintaining the status quo. All regulations
under the Packers and Stockyards Act would remain unchanged; that is,
the Payment Systems rule would become effective on July 1, 2026. This
first alternative forms the baseline against which AMS compares the
other alternatives.
The second alternative is this proposed rule. AMS proposes to delay
the effective date of the Payment Systems rule for 18 months. If
finalized, the Payment Systems rule would become effective on December
31, 2027, rather than July 1, 2026.
AMS considered a third alternative, the 12-Month Delay alternative,
which is similar to the preferred alternative, and proposes to delay
the effective date of Sec. Sec. 201.106, 110, 112, and 290 by 12
months (July 1, 2027) instead of 18 months (December 31, 2027).
Direct Quantified Benefits of the Proposed 18-Month Delay of Sec. Sec.
201.106, 110, 112, and 290--Preferred Alternative
With the proposed 18-month delay of the Poultry Systems rule, much
of the first-year costs in the final rule that AMS considered are one-
time setup and preparation activities that processors and growers would
incur before the rule became effective. AMS believes many of these
costs have likely already occurred, and therefore they are not affected
by the delay; however, AMS welcomes comments for the industry related
to these costs during the comment period of this proposed rule. The
delay would affect recurring costs. The delay would save live poultry
growers and LPDs administrative costs associated with the ongoing
administrative costs that would otherwise occur in the first 18 months
after the Payment Systems rule becomes effective.
Delaying the effective date for 18 months would shift all costs for
both LPDs and growers back by 18-months. This proposed rule would
enable LPDs to save $4.9 million and poultry growers to save $249,000
in administrative costs for a total of $5.2 million in the first year.
They would save an additional $2.5 million and $125,000, respectively,
in the second year for a total of $7.7 million. Administrative costs
for LPDs were expected to decrease by $800,000 in the fifth year after
the rule became effective. If the effective date is delayed 18 months,
the decrease in costs will be delayed as well. Costs would be $800,000
higher in the fifth year and $400,000 in the sixth year for LPDs. This
would result in a ten-year total cost savings of $6.1 million for LPDs
and $374,000 for poultry growers; a combined savings of $6.5 million.
Table 1 below summarizes cost savings to poultry growers and LPDs if
the effective date of the Payment Systems rule is delayed until
December 31, 2027.
[[Page 12938]]
Table 1--Quantified Benefits From Savings in Administrative Costs for LPDs, and Poultry Growers From Delaying
the Effective Date of the Payments Systems Rule for 18 Months
----------------------------------------------------------------------------------------------------------------
Value Growers ($) LPDs ($) Total ($)
----------------------------------------------------------------------------------------------------------------
First-Year...................................................... 249,000 4,902,000 5,151,000
Ten-Year Total.................................................. 374,000 6,146,000 6,520,000
NPV discounted at 3%............................................ 360,000 6,038,000 6,398,000
NPV discounted at 7%............................................ 342,000 5,880,000 6,222,000
Annualized NPV discounted at 3%................................. 42,000 708,000 750,000
Annualize NPV discounted at 7%.................................. 49,000 837,000 886,000
----------------------------------------------------------------------------------------------------------------
Indirect Cost Savings/Benefits of the 18-Month Delay of Sec. Sec.
201.106, 110, 112 and 290--Preferred Alternative
The indirect benefits (cost savings) of this proposed rule
represent the indirect benefits incurred during the 18-month period of
the delay of the effective date. AMS expects that Sec. Sec. 201.106,
110, and 112 include provisions that may require LPDs to change their
existing business practices, which has the potential to affect the
indirect costs of the Payment Systems rule. As discussed in the Payment
Systems rule, AMS does not have sufficient data to make an inference on
the number of complexes that would need to change business practices or
the magnitude of any changes that would be required.\9\
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\9\ See ``Poultry Grower Payment Systems and Capital Improvement
Systems,'' 90 FR 5198, January 16, 2025.
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If LPDs modify existing grower compensation structures in response
to Sec. 201.106, changes in performance-based payments could adversely
affect grower performance incentives and cause growers to produce
broilers less efficiently. As a result, LPDs could face increased
production costs. Even a very small change in efficiency could result
in relatively large increases in the cost of producing broilers. Those
costs could be passed on to consumers.
If AMS enforcement of Sec. 201.112 has the effect of preventing
broiler growers from making additional capital investments, then such
decisions to forgo investment will likely result in fewer benefits for
LPDs, and more for growers. AMS is not able to quantify these lost
benefits (costs) to LPDs.
As the preferred alternative proposes to delay the effective date
of the Payment Systems rule for 18 months, LPDs and growers may
experience indirect benefits proportional to this delay, though AMS
expects these indirect benefits to be small relative to the benefits
associated with the Payments Systems rule.
Indirect Costs/Foregone Benefits of the 18-Month Delay of Sec. Sec.
201.106, 110, 112 and 290--Preferred Alternative
There are unquantifiable benefits to the provisions regulating LPDs
in Sec. Sec. 201.106, 110, and 112, which would be foregone in the 18-
month period in which the Payment Systems rule would be delayed under
the preferred alternative. Section 201.106 could benefit growers from
increased clarity and certainty about the lowest possible revenue and
reduce variability in outcomes under a growing arrangement. Section
201.110 may benefit broiler growers through improved fairness in
comparison. Section 201.112 may provide broiler growers with better
information to make financial decisions. The size of these
unquantifiable benefits would be directly related to the extent of
these reductions. However, AMS does not have sufficient data to make an
inference on the number of complexes that would change business
practices or the magnitude of any changes that would be required.
AMS expects broiler growers would benefit from the Payment Systems
rule, though AMS is unable to predict the size of these benefits with
certainty. The indirect benefits of the Payment Systems rule would
still occur, they would just be delayed by 18 months. Thus, broiler
growers would experience unquantifiable costs (foregone benefits)
proportional to this delay, though AMS expects these unquantifiable
costs to be small.
Direct Cost Savings/Benefits of the 12-Month Delay Alternative
AMS also evaluated benefits and costs of delaying the effective
date for 12 months (12-Month Delay Alternative). The 12-Month Delay
Alternative is similar to the proposed alternative, but the effective
date of the Payment Systems rule would be delayed 12 rather than 18
months. Under the 12-Month Delay Alternative all costs for both LPDs
and growers would be shifted back by one year, resulting in a savings
to LPDs of $4.9 million and poultry growers of $249,000 in
administrative costs for a total of $5.2 million in savings. Because
administrative costs for LPDs were expected to decrease in the fifth
year after the rule became effective, costs in the fifth year would be
$800,000 higher for LPDs if the effective date is delayed 12 months.
The ten-year total direct administrative cost savings would be $4.3
million for the 12-Month Delay Alternative. The table below contains
estimated administrative cost savings for LPDs and poultry growers for
the 12-Month delay Alternative.
Table 2--Quantified Benefits From Savings in Administrative Costs for LPDs and Poultry Growers From Delaying the
Effective Date of the Payments Systems Rule for 12 Months
----------------------------------------------------------------------------------------------------------------
Value Growers ($) LPDs ($) Total ($)
----------------------------------------------------------------------------------------------------------------
First-Year...................................................... 249,000 4,902,000 5,151,000
Ten-Year Total.................................................. 249,000 4,097,000 4,347,000
NPV discounted at 3%............................................ 242,000 4,065,000 4,307,000
NPV discounted at 7%............................................ 233,000 4,007,000 4,241,000
Annualized NPV discounted at 3%................................. 28,000 477,000 505,000
Annualize NPV discounted at 7%.................................. 33,000 571,000 604,000
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[[Page 12939]]
Indirect Benefits/Cost Savings of the 12-Month Delay Alternative
As in the case of the preferred alternative, the indirect benefits
of the 12-Month Delay Alternative represent the indirect costs not
incurred during the 12-month period of the delay of the effective date.
The indirect costs of the final rule would still occur, they would just
be delayed. Again, AMS cannot rule out the possibility that incentives
may be affected by the Payment Systems rule, and AMS is unable to
predict specific effects with certainty. LPDs and growers may
experience indirect benefits (cost savings) proportional to this 12-
month delay, though AMS expects these indirect benefits to be very
small. Because the proposed delay is shorter, AMS expects the indirect
benefits of 12-Month Delay Alternative to be smaller than the indirect
benefits of the preferred alternative.
Unquantifiable Direct Costs Incurred of the 12-Month Delay Alternative
As with the preferred alternative, a 12-month delay of the
effective date of the provisions regulating LPDs in Sec. Sec. 201.106,
110, and 112 would likely impose additional unquantifiable direct costs
on LPDs. The nature of these unquantifiable direct costs is the same as
in the preferred alternative, but these costs may be smaller do to the
shorter proposed delay of the effective date of the Payment Systems
rule.
Costs/Foregone Benefits of the 12-Month Delay Alternative
The nature of the costs (benefits foregone) under 12-Month Delay
Alternative are the same as under the preferred alternative. As in the
case of the preferred alternative, the costs of the 12-Month
Alternative Delay represent the benefits not incurred during the period
of the proposed delay of the effective date. The benefits of the final
rule would still occur, they would just be delayed. As the 12-Month
Delay Alternative represents a shorter delay, AMS expects the costs of
12-Month Delay Alternative to be smaller than the costs of the
preferred alternative.
Comparison of Alternatives
The benefits and costs of delaying the effective date of the
Payments Systems rule are very similar, but all costs and benefits are
slightly smaller for the 12-Month Delay Alternative. AMS invites
comments and data concerning the benefits and costs of delaying the
effective date of the Payment Systems rule.
AMS is proposing to delay the effective date of the Payment Systems
rule to allow for thorough consideration of estimated costs and the
policy and legal issues associated with the final rule. Because twelve
months may not provide adequate time for the thorough consideration
needed, AMS chose the preferred alternative of proposing to delay the
effective date by 18 months.
C. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601-612) requires agencies
to consider the economic impact of each rule on small entities and
evaluate alternatives that would accomplish the objectives of the rule
without unduly burdening small entities or erecting barriers that would
restrict their ability to compete in the market.
AMS is proposing to delay implementation of the Payment Systems
rule which added Sec. Sec. 201.106, 110, 112 and 290 to the
regulations under the P&S Act. Sections 201.106, 110, and 112 would
regulate LPDs that contract with poultry growers to raise broilers. The
regulations would have no effect on LPDs that contract or process
turkeys, geese, ducks or other fowl unless they also contract or
process broilers. Currently, the Payment Systems rule is scheduled to
go into effect on July 1, 2026. This proposed rule would delay
implementation until December 31, 2027.
The final rule: (1) prohibits livestock poultry dealers (LPDs) from
reducing a grower's compensation based on the grower's ranking under a
poultry grower ranking system; (2) establishes a presumptive violation
of the P&S Act by LPDs when aggregate gross annual payments based upon
a grower's ranking under a poultry grower ranking system exceeds a
certain threshold; (3) holds LPDs to a duty of fair comparison when
designing and operating their poultry grower ranking system and
requires documentation of compliance with that duty; and (4) requires
LPDs to provide certain disclosures when requesting or requiring that
broiler growers make additional capital investments.
When AMS finalized the Payment Systems rule, AMS explained there
was uncertainty as to whether the benefits would outweigh the
costs.\10\ There is no literature addressing how growers' incentives
might change if performance discounts were not part of the tournament
or if variability in performance payments were limited.
---------------------------------------------------------------------------
\10\ See ``Poultry Grower Payment Systems and Capital
Improvement Systems,'' 90 FR 5198, January 16, 2025.
---------------------------------------------------------------------------
AMS is proposing to delay the effective day of the Payment Systems
rule to allow for thorough consideration of estimated costs and the
policy and legal issues associated with the final rule.
The only firms that the Payment Systems rule directly regulates are
LPDs. The SBA defines small businesses by their North American Industry
Classification System Codes (NAICS). LPDs, NAICS 311615, are considered
small businesses if they have fewer than 1,250 employees.\11\
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\11\ 13 CFR part 121.
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AMS maintains data on LPDs from the annual reports \12\ these firms
file with AMS. AMS records of annual reports identified 45 LPDs that
processed broilers subject to the regulations during fiscal year 2023.
Twenty-four of the LPDs were small businesses according to the SBA
standard.
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\12\ Live poultry dealers are required to file form PSD 3002,
``Annual Report of Live Poultry Dealers'' (OMB Control No. 0581-
0308), with AMS.
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Delaying implementation of the Payment Systems rule would not cause
significant costs for any LPD. LPDs would still be required to comply
with Sec. Sec. 201.106, 110, and 112 of the regulations, but would
have until December 31, 2027, to do so. The regulations place
restrictions on the way LPDs' contract with growers. Delaying
implementation would give LPDs more time to make changes to their
business practices to comply with the new regulations. No LPD, whether
small or large, would be required to change any practices as result of
this proposed regulatory action. No LPD, whether small or large, would
be required to change any practices as result of this proposed
regulatory action. Rather, LPDs are expected to benefit from the delay
of the effective date for Sec. Sec. 201.106, 110, 112, and 290 due to
the cost savings incurred.
[[Page 12940]]
In evaluating direct cost savings from delaying the Payment Systems
rule, AMS follows the same analytical approach used in the final rule.
The updated estimates incorporate the latest industry parameters and
wage rates while maintaining consistency with the methodology used.
Hourly wage rates were established using the following BLS
classifications for each labor category as follows (NAICS Code--OCC
code--OCC Title): Management (3116--11-1020--General and Operations
Managers) for live poultry dealers' managers, and Legal (3110--23-
1011--Lawyers) for attorneys.\13\ The average hourly wage rates used to
estimate cost savings were updated from the final rule to include a
42.34 percent markup for benefits and are as follows: Management--
$102.56, Legal--$145.93, Administrative--$48.38, and Information
Technology--$101.72. For reference, the analysis in the final rule is
described in detail in the Federal Register at 90 FR 5146 (see pages
5189-5206).\14\
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\13\ U.S. Bureau of Labor Statistics, May 2024 National
Occupational Employment and Wage Estimates, May 2024, <a href="https://www.bls.gov/oes/special.requests/oesm24all.zip">https://www.bls.gov/oes/special.requests/oesm24all.zip</a>.
\14\ See ``Poultry Grower Payment Systems and Capital
Improvement Systems,'' 90 FR 5190, January 16, 2025.
---------------------------------------------------------------------------
Direct Cost Savings/Benefits to Small LPDs of the Proposed 18-Month
Delay of Sec. Sec. 201.106, 110, 112, and 290--Preferred Alternative
With the proposed 18-month delay of the Poultry Systems rule, much
of the first-year costs in the final rule that AMS considered are one-
time setup and preparation activities that processors would incur
before the rule became effective. AMS believes many of these costs have
likely already occurred, and therefore they are not affected by the
delay; however, AMS welcomes comments from the industry related to
these costs during the comment period of this proposed rule.
The delay would affect recurring costs. Delaying the effective date
of the final rule will enable LPDs to avoid annual administrative costs
that would otherwise occur in the first 18 months after the Payment
Systems rule becomes effective. Delaying the effective date for 18
months would shift all costs for small LPDs back by 18 months. This
proposed rule would enable small LPDs to save $587,000 in
administrative costs in the first year after July 1, 2026, which is the
first year after the rule would otherwise become effective. They would
save an additional $294,000 in the second year for a total of $881,000.
Administrative costs for small LPDs were expected to decrease by
$72,000 in the fifth year after the rule became effective. If the
effective date is delayed, the decrease in costs will be delayed as
well, and costs in the fifth year would be $72,000 higher for small
LPDs. These lower administrative costs were expected to continue in the
sixth year after the rule became effective. If the effective date is
delayed, the decrease in costs for the first half of the sixth year
will also be delayed, and costs in the sixth year would be $36,000
higher for small LPDs. This would result in a ten-year total cost
savings of $773,000 for small LPDs. Column three in table 3 below
summarizes cost savings to small LPDs if the effective date of the
Payment Systems rule is delayed until December 31, 2027.
Direct Cost Savings/Benefits of the 12-Month Delay Alternative
AMS also evaluated benefits and costs of delaying the effective
date for 12 months (12-Month Delay Alternative). The 12-Month Delay
Alternative is similar to the proposed alternative, but the effective
date of the Payment Systems rule would be delayed 12 rather than 18
months. Under the 12-Month Delay Alternative all costs for small LPDs
would be shifted back by one year, resulting in savings to small LPDs
of $587,000 in administrative costs. Because administrative costs for
small LPDs were expected to decrease in the fifth year after the rule
became effective, costs in the fifth year would be $72,000 higher for
small LPDs if the effective date is delayed 12 months. The ten-year
total direct administrative cost savings would be $515,000 for the 12-
Month Delay Alternative. Column two in table 3 below contains estimated
administrative cost savings for small LPDs for the 12-Month Delay
Alternative.
Table 3--Quantified Benefits From Savings in Administrative Costs for
Small LPDs From Delaying the Effective Date of the Payments Systems Rule
for 12 and 18 Months
------------------------------------------------------------------------
12-Month delay 18-Month delay
Value ($) ($)
------------------------------------------------------------------------
All Small LPDs Combined:
First-Year.................... 587,000 587,000
Ten-Year Total................ 515,000 773,000
NPV discounted at 3%.......... 508,000 755,000
NPV discounted at 7%.......... 497,000 730,000
Annualized NPV discounted at 60,000 88,000
3%...........................
Annualized NPV discounted at 71,000 104,000
7%...........................
Per Entity:
First-Year.................... 24,000 24,000
Ten-Year Total................ 21,000 32,000
NPV discounted at 3%.......... 21,000 31,000
NPV discounted at 7%.......... 21,000 30,000
Annualized NPV discounted at 2,000 4,000
3%...........................
Annualized NPV discounted at 3,000 4,000
7%...........................
------------------------------------------------------------------------
Threshold Analysis
LPDs report net sales in Annual Reports to AMS.\15\ While net sales
are not the same as annual revenue, unless the small LPDs have
diversified income, net sales is a reasonable substitute for annual
revenue. Table 4 below groups small LPDs' net sales into quartiles,
reports the average net sales in each quartile, and compares average
net sales to average expected cost savings from delaying the Payment
Systems rule for 18 months. If a significant impact is defined as 1
percent of net sales and a substantial number is 25 percent (6 firms)
of the small businesses, expected direct cost savings resulting from
[[Page 12941]]
delaying the effective date of the Payment Systems rule 18 months would
not be significant. Savings would be largest for the smallest quartile,
but not significant. First-year cost savings for the smallest quartile
would be 0.24 percent of net revenues. Annualized savings are less than
the first-year cost savings.
---------------------------------------------------------------------------
\15\ Live poultry dealers are required to file form PSD 3002,
``Annual Report of Live Poultry Dealers'' (OMB Control No. 0581-
0308), with AMS.
Table 4--Comparison of Small Live Poultry Dealers' Net Sales to Expected Direct Cost Savings From Delaying the
Effective Date of Payment Systems Rule for 18 Months
----------------------------------------------------------------------------------------------------------------
Ten year NPV Ten year NPV
First-year annualized at annualized at
Quartile Average net total as a 3 percent as a 7 percent as a
sales percent of net percent of net percent of net
sales sales sales
----------------------------------------------------------------------------------------------------------------
0 to 25%........................................ $10,017,311 0.244 0.037 0.043
25 to 50%....................................... 34,567,539 0.071 0.011 0.012
50 to 75%....................................... 92,380,634 0.026 0.004 0.005
75 to 100%...................................... 226,958,521 0.011 0.002 0.002
----------------------------------------------------------------------------------------------------------------
Data in the table do not account for indirect cost savings related
to delaying the effective date of the Payment Systems rule. If LPDs
modify existing grower compensation structures in response to Sec.
201.106, changes in performance-based payments could adversely affect
grower performance incentives and cause growers to produce broilers
less efficiently. As a result, LPDs could face increased production
costs. If AMS enforcement of Sec. 201.112 has the effect of preventing
broiler growers from making additional capital investments, then such
decisions to forgo investment would likely result in fewer benefits for
LPDs.
As the preferred alternative proposes to delay the effective date
of the Payment Systems rule for 18 months, LPDs and growers may
experience indirect benefits proportional to this delay. However, AMS
was not able to quantify these indirect benefits. After adding the
indirect benefits with the direct cost savings, the benefits of
delaying the effective date of the Payment Systems rule could be
significant for a substantial number of LPDs.
12-Month Delay Alternative
Benefits of the 12-Month Delay alternative would be very similar to
the preferred alternative, but because the delay is shorter, the
benefits to LPDs would be less. The table below indicates that neither
first-year cost savings to LPDs nor annualized cost savings would be
greater than one percent of average net sales for any quartile. Table 5
below has direct cost savings as percentage of average net sales for
growers in each quartile.
As with the preferred alternative, LPDs would likely experience
indirect benefits from delaying the effective date of the Payment
Systems rule. The benefits would be similar to those associated with
the preferred alternative, but because the time delay is shorter in the
12-Month Delay alternative, the benefits would be less than the
benefits associated with the preferred alternative.
Table 5--Comparison of Small Live Poultry Dealers' Net Sales to Expected Direct Cost Savings From Delaying the
Effective Date of Payment Systems Rule for 12 Months
----------------------------------------------------------------------------------------------------------------
Ten year NPV Ten year NPV
First-year annualized at annualized at
Quartile Average net total as 3 percent as a 7 percent as a
sales percent of net percent of net percent of net
sales sales sales
----------------------------------------------------------------------------------------------------------------
0 to 25%........................................ $10,017,311 0.244 0.025 0.029
25 to 50%....................................... 34,567,539 0.071 0.007 0.009
50 to 75%....................................... 92,380,634 0.026 0.003 0.003
75 to 100%...................................... 226,958,521 0.011 0.001 0.001
----------------------------------------------------------------------------------------------------------------
After combining the direct and indirect benefits, LPDs would gain
more from the preferred alternative, but the difference between the
alternatives is small relative to the costs and benefits associated
with Payment Systems rule. AMS is proposing to delay the effective date
of the Payment Systems rule to allow for thorough consideration of
estimated costs and the policy and legal issues associated with the
final rule. Because twelve months may not provide adequate time for the
thorough consideration needed, AMS chose the preferred alternative of
proposing to delay the effective date by 18 months.
AMS does not expect direct cost savings to be significant for a
substantial number of LPDs. However, AMS is uncertain of the size of
unquantified indirect benefits. If they are added to the quantified
savings, benefits could be significant for substantial number of small
LPDs. AMS invites comments and data concerning the benefits and costs
of delaying the effective date of the Payment Systems rule.
D. Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
chapter 35), AMS requested OMB approval of the new information
collection and recordkeeping requirements related to the Payment
Systems rule when it was proposed in the Federal Register on June 10,
2024 (89 FR 49002). The information collection was approved under OMB
Control No. 0581-0346 for a total of 59,182 hours for the first year,
and 42,682 hours per year thereafter. No additional collection or
recordkeeping requirements would be imposed on the public if the
proposal to delay the effective date of the Payment Systems rule is
finalized. Accordingly, OMB clearance is not required by the Paperwork
Reduction Act.
[[Page 12942]]
E. Civil Rights Impact Analysis Statement
AMS has considered the potential civil rights implications of this
proposed rule on members of protected groups and has determined this
proposed rule does not contain any requirements related to eligibility,
benefits, or services that would have the purpose or effect of
excluding, limiting, or otherwise disadvantaging any individual, group,
or class of persons on one or more prohibited bases.
F. Executive Order 13175
Executive Order 13175 requires Federal agencies to consult with
Indian Tribes on a government-to-government basis on policies that have
Tribal implications. This includes regulations, legislative comments or
proposed legislation, and other policy statements or actions.
Consultation is required when such policies have substantial direct
effects on one or more Indian Tribes, on the relationship between the
Federal Government and Indian Tribes, or the distribution of power and
responsibilities between the Federal Government and Indian Tribes. The
following is a summary of activity to date.
AMS engaged in a Tribal Consultation in conjunction with a previous
rulemaking also under the P&S Act (``Inclusive Competition and Market
Integrity Under the Packers and Stockyards Act'' (87 FR 60010, October
3, 2022)) on January 19, 2023, in person in Tulsa, Oklahoma, and
virtually. AMS received multiple Tribal comments from that
Consultation, many of which were specific to and considered in that
rulemaking. In that consultation, Tribes raised legal concerns with
respect to the jurisdiction of AMS enforcement of the P&S Act. Tribes
commented that the P&S Act does not apply to Tribes and Tribal
entities. Those comments raise a legal issue of statutory
interpretation, but these concerns are not directly implicated by this
rulemaking. AMS does not find that this rulemaking carries substantial
direct effects on one or more Indian Tribes beyond the purely legal
issue raised during consultation.
AMS recognizes and supports the Secretary's desire to incorporate
Tribal and Indigenous perspectives, remove barriers, and encourage
Tribal self-determination principles in USDA programs, including
hearing and understanding Tribal views on legal authorities and cost
implications as facts and circumstances develop. If a Tribe requests
additional consultation, AMS will work with USDA's Office of Tribal
Relations to ensure meaningful consultation is provided in accordance
with Executive Order 13175.
G. Executive Order 12988
This proposed rule is not intended to have a retroactive effect. If
adopted, this proposed rule would not preempt any State or local laws,
regulations, or policies unless they present an irreconcilable conflict
with this rulemaking.
H. E-Government Act
AMS is committed to complying with the E-Government Act (44 U.S.C.
3601, et seq.) by promoting the use of the internet and other
information technologies to provide increased opportunities for citizen
access to Government information and services, and for other purposes.
I. Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA, Pub. L.
104-4) requires Federal agencies to assess the effects of their
regulatory actions of State, local, and Tribal governments, or the
private sector. Agencies generally must prepare a written statement,
including cost benefits analysis, for proposed and final rules with
Federal mandates that may result in expenditures of $100 million or
more (adjusted for inflation) in any 1 year for State, local or Tribal
governments, in the aggregate, or to the private sector. UMRA generally
requires agencies to consider alternatives and adopt the more cost
effective or least burdensome alternative that achieves the objectives
of the rule. This rulemaking will not compel the expenditure in any one
year of $100 million or more (adjusted for inflation) by State, local,
and Tribal governments, in the aggregate, or by the private sector.
Therefore, a statement under 2 U.S.C. 1532 is not required.
Erin Morris,
Administrator, Agricultural Marketing Service.
[FR Doc. 2026-05330 Filed 3-17-26; 8:45 am]
BILLING CODE P
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</html>Indexed from Federal Register on March 18, 2026.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.