Rule2026-10880
Poultry Grower Payment Systems and Capital Improvement Systems; Delay of Effective Date
Primary source
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Published
June 1, 2026
Effective
December 31, 2027
Issuing agencies
Agriculture DepartmentAgricultural Marketing Service
Abstract
The Agricultural Marketing Service (AMS or the Agency) is delaying the effective date of the "Poultry Grower Payment Systems and Capital Improvement Systems" final rule (Payment Systems rule or final rule), which was published in the Federal Register on January 16, 2025, to allow time for further consideration of actions that may be taken regarding the disposition of the rule. The current effective date of the Payment Systems rule is July 1, 2026. With this action, AMS is delaying the effective date to December 31, 2027.
Full Text
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<title>Federal Register, Volume 91 Issue 104 (Monday, June 1, 2026)</title>
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[Federal Register Volume 91, Number 104 (Monday, June 1, 2026)]
[Rules and Regulations]
[Pages 32314-32323]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-10880]
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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: Final rule; delay of effective date.
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SUMMARY: The Agricultural Marketing Service (AMS or the Agency) is
delaying the effective date of the ``Poultry Grower Payment Systems and
Capital Improvement Systems'' final rule (Payment Systems rule or final
rule), which was published in the Federal Register on January 16, 2025,
to allow time for further consideration of actions that may be taken
regarding the disposition of the rule. The current effective date of
the Payment Systems rule is July 1, 2026. With this action, AMS is
delaying the effective date to December 31, 2027.
DATES: As of July 1, 2026, the effective date of the final rule
published January 16, 2025 (90 FR 5146) is delayed until December 31,
2027.
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#4f1f1c0b182e3c272621283b20210b0c0f3a3c2b2e61282039"><span class="__cf_email__" data-cfemail="2171726576405249484f46554e4f656261545245400f464e57">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
A. Background and Basis for Delay
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 Payment Systems rule addresses the relationship between live
poultry dealers (LPDs) and the poultry growers under contract with
them. The rule: (1) prohibits LPDs from reducing a grower's
compensation based on the grower's ranking under a poultry grower
ranking system (9 CFR 201.106); (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 (Sec. 201.106); (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 (Sec.
201.110); and (4) requires LPDs to provide certain disclosures when
requesting or requiring that broiler growers make additional capital
investments (Sec. 201.112).
At the time of publication, AMS estimated that the Payment Systems
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.).'')
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On March 18, 2026, AMS published a proposed rule, ``Poultry Grower
Payment Systems and Capital Improvement Systems; Delay of Effective
Date'' (the Proposed Delay), proposing to delay the effective date of
[[Page 32315]]
the Payment Systems rule to December 31, 2027, to allow time for
further consideration of actions that may be taken regarding the
disposition of the rule (91 FR 12936).
AMS received more than 2,800 comments in response. Commenters
included growers, advocacy groups, industry, members of Congress, and
the general public. After consideration of the comments submitted, AMS
is finalizing the Proposed Delay without change. AMS is doing so in
alignment with Congressional direction, and due to the significant
estimated costs and the policy and legal issues commenters have
identified with the Payment Systems rule. AMS believes delaying the
effective date of the rule to December 31, 2027, will allow for
thorough consideration of these matters as it deliberates actions that
may be taken regarding the disposition of the rule. AMS provides its
analysis and response to the comments received in section B of this
document.
B. Discussion of Comments
a. Overview of Comments Received
AMS received more than 2,800 comments from farmer associations,
poultry and meat industry trade associations, integrated live poultry
dealers, non-integrated poultry dealers, poultry growers, farm advocacy
organizations, and members of the general public. About 2,700 comments
opposed the Proposed Delay, about a dozen supported it, and the
remainder of the comments were outside the scope of the Proposed Delay.
There were approximately 225 unique comments, meaning a comment that
was not replicated by any other comments, and approximately 2,600 form
letter comments. Supporters of the Proposed Delay included one large
poultry integrator, two meat and poultry trade associations, and
several individuals affiliated with non-integrated poultry companies
that do not have control over all their inputs. Various poultry growers
and grower organizations opposed this proposal.
b. Arguments That Further Delay Is Appropriate
Commenters supporting the delay suggested the delay is necessary to
provide clarity to the industry, including contract growers, and to
avoid the costs AMS identified in the Payment Systems rule. These
commenters also advised that the delay was appropriate to further
evaluate the Payment Systems rule's consistency with the P&S Act and
its potential to cause significant harm to growers, processors, and
American consumers. Further, supportive commenters noted the delay is
consistent with Congressional intent citing the explanatory statement
in the USDA appropriations bill. Finally, a few commenters recommended
the rule undergo further analysis to better assess the impacts for LPDs
operating without the benefit of vertical integration.
AMS Response: AMS appreciates the comments in support of the delay
and agrees with the commenters. AMS believes delaying the rule is
appropriate to avoid near-term implementation costs as the agency
further evaluates the rule's financial and operational impacts,
particularly in relation to consumer prices. AMS also acknowledges the
final rule was primarily designed to address concerns related to
integrated production. AMS will consider the impacts for LPDs operating
without the benefit of vertical integration in addition to other
identified legal and policy concerns as it deliberates actions that may
be taken regarding the disposition of the rule.
c. Arguments That Further Delay Is Unnecessary and Harmful
The largest group of comments stated enough time has passed for
consideration of the Payment Systems rule and that it should be
implemented as planned. Commenters asserted AMS fully considered the
costs and benefits of the final rule when it was published and did not
provide any new evidence to justify its Proposed Delay. Other
commenters noted both growers and LPDs have been preparing for the rule
to take effect and further regulatory uncertainty would cause economic
harm. More poultry farmers would be harmed by unfair practices under
the currently prevailing poultry tournament compensation schemes and go
out of business during the 18-month delay due to inadequate or
unpredictable compensation than would be the case if the rule becomes
effective as originally scheduled. One comment said the justification
for delaying the effective date was unclear because a delay is unlikely
to improve USDA's understanding of the rule's economic impact. Poultry
contracts vary across regions, and to accurately understand the rule's
impact on growers would require that USDA contact growers directly.
Doing so is next to impossible given growers' concerns about
retaliation from LPDs.
AMS Response: AMS appreciates the comments in support of the
implementation of the Payment Systems rule and understands the concerns
regarding delayed implementation. However, AMS is making no changes in
response to these comments. It is AMS' view that the delay of effective
date aligns with Congressional direction and is warranted due to the
significant estimated costs and the policy and legal issues commenters
have identified with the Payment Systems rule. AMS believes delaying
the effective date of the rule to December 31, 2027, will allow further
consideration of these matters as it deliberates actions that may be
taken regarding the disposition of the rule. In the meantime, AMS will
continue to utilize its robust enforcement authority to investigate any
allegations of unfair practices.
d. Arguments Against the Need for Further Analysis
Approximately 2,700 comments argued that there is no need to delay
the Payment Systems rule's effective date to allow time for further
analysis of the costs of the rule. Of these, about 2,600 were form
letter comments. These commenters cited the consent decree in United
States v. Cargill Meat Solutions Corp.,\5\ which required limits on
performance pay and the elimination of base pay reductions in its
contracts with poultry growers, as evidence that the Payment Systems
rule would enforce transparency and fairness under the P&S Act.
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\5\ United States v. Cargill Meat Solutions Corp., 1:22-cv-1821-
SAG (D. Md. June 5, 2023).
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One comment asserted that one of AMS' primary justifications for
delaying the rule--uncertainty around the rule's provisions on grower
incentives--did not accurately reflect the research on this topic. The
commenter cited economic literature \6\ and indicated that AMS
inaccurately characterized the lack of economic research addressing how
grower incentives could change in the absence of performance discounts.
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\6\ The comment cited the following articles: Wang, Zhen and
Tomislav Vukina. (2017) ``Welfare Effects of Payment Truncation in
Piece Rate Tournaments'' Journal of Economics Vol. 120: 219-249;
Tsoulouhas, Theofanis and Vukina Tomislav. (2001) ``Regulating
Broiler Contracts: Tournaments Versus Fixed Performance Standards''
American Journal of Agricultural Economics Vol. 83: 1062-1073;
Knoeber, C.R. and Thurman, W.N. (1995), `` `Don't Count Your
Chickens. . .'': Risk and Risk Shifting in the Broiler Industry''
American Journal of Agricultural Economics, 77: 486-496; Vukina,
Tomislav and William E. Foster, (1996) ``Efficiency Gains in Broiler
Production Through Contract Parameter Fine Tuning'' Poultry Science
Vol. 11: 1351-1358; Lazear, Edward P. and Sherwin Rosen. (1981)
``Rank Order Tournaments as Optimum Labor Contracts'' Journal of
Political Economy Vol. 89: 841-864.
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AMS Response: AMS appreciates the comments against the need for
further analysis. However, AMS disagrees. While the cited consent
decree contains provisions similar to Sec. 201.106 of the Payment
Systems rule, it does not
[[Page 32316]]
include provisions analogous to Sec. Sec. 201.110 or 201.112.
Additionally, AMS believes it is important to review these complex
requirements on an industry-wide basis rather than within the confines
of the operation of one LPD.
AMS disagrees with the commenter's assertion that AMS inaccurately
assessed public research. The research the commenter cited is relevant
to poultry tournaments and broiler contracts but the research does not
specifically address how growers' incentives might change if
performance discounts were not part of the tournament and if
variability in performance payments were limited--both of which are
changes to tournament systems under the Payment Systems rule. Further,
these comments are outside the scope of the delay of the effective date
of the Payment Systems Rule and speak to the substance of the rule.
While the current rulemaking is limited to the delay of Payment Systems
rule, AMS appreciates the comments regarding the merits of the
underlying rule and believes the diversity of views underscore the need
for additional consideration. The agency will consider these comments
as it deliberates actions that may be taken regarding the disposition
of the rule.
e. Critiques of the Proposed Delay's Benefit-Cost Analysis
Comment: Commenters also argued that the Proposed Delay's benefit-
cost analysis is flawed, criticizing how AMS used an assessment of the
Payment Systems rule's costs and benefits to justify delaying the
effective date. These commenters stated the costs are overestimated and
that any claimed savings accruing to LPDs in the first year of the
delay would come at the expense of the many unquantified benefits
growers would gain from the final rule becoming effective as scheduled.
Commenters provided examples of what they deemed were unquantified
benefits, including increased certainty of minimum compensation
outcomes, improved financial planning and ability to manage financial
risk, reduced potential for deception and unfairness, and reduced
information asymmetry that would contribute to more efficient
investment and resource allocation decisions. With poultry industry
sales in excess of $45 billion annually, commenters asserted the costs
outlined by AMS are insignificant. When one compares the direct,
quantified costs against the significant, unquantified benefits the
rule would provide to poultry growers, it appears AMS is ignoring
growers' concerns in favor of poultry integrators' interests.
Another commenter argued the Proposed Delay assigns significantly
more quantified benefits to LPDs and ignores the qualitative benefits
the Payment Systems final rule would provide to growers.
AMS Response: The benefit-cost analysis in the Proposed Delay is
based on the benefit-cost analysis in the Payment Systems rule. AMS
applied all of the same methods, but for quantified estimates, AMS made
use of updated data. Updated wage data from the Department of Labor
accounts for most of the differences. As explained further in the
benefit-cost analysis of this final rule, AMS also removed certain one-
time set-up costs. AMS acknowledges that quantified costs associated
with delaying implementation of the Payment Systems rule are
significantly less than overall industry revenues, but believes that is
only one of a multitude of factors for consideration as is it
deliberates actions that may be taken regarding the disposition of the
rule. AMS disagrees that it has ignored grower concerns in favor of the
interests of LPDs. As evident in the benefit-cost analysis in this
final rule, AMS has accounted for the costs and benefits to both
segments of the industry. As mentioned previously, AMS is committed to
using its robust enforcement authority to investigate any grower
allegations of unfair practices during the delay period.
Comment: A few commenters objected to the fact that the Proposed
Delay's benefit-cost analysis assigned a cost to each contract poultry
grower for review of new contracts and disclosures, even though growers
would directly benefit from this activity. Several commenters stated
that the time growers would spend reading these documents should not be
considered a cost; however, if this time is going to be considered a
cost, assuming every grower will do so is an exaggeration of this cost
component because the rule does not require growers to read the
documents.
AMS Response: AMS estimates some growers will spend more than the
average amount of time reading contracts and disclosures. AMS also
acknowledges some will spend less time, and some may not read them at
all. For the benefit-cost analysis, AMS used its best estimate of the
average time expected to be spent for this purpose.
The time growers spend reading the new contracts and disclosures is
a cost because it is time they must invest to understand the new
requirements even if they ultimately benefit from reading the
documents. Time has an opportunity cost, and any hour spent reviewing
materials is an hour that cannot be used for farm operations, other
productive activities, or off-farm work. And while growers are not
required to read every document, AMS expects that many will review the
materials because they are directly affected by the rule and need to
understand the changes.
Comment: A commenter asserted that AMS did not properly consider
the substantial benefits of the Payment Systems rule and the
significant harm a delay would cause to both growers and LPDs,
undermining benefit-cost concerns; instead, AMS focused only on the
implementation and compliance costs.
One commenter argued that AMS overstated the burden on LPDs by
assuming each LPD would need to provide an average of 477 prior
contracts and disclosure documents in years two through four. They
noted these materials would only be required if a complex's average
grower payment declined from the previous year, and because grower
payments would not decrease at many complexes, these submissions would
not always be necessary. The commenter also mentioned that in the
Payment Systems rule, AMS explained that the recordkeeping and
documentation requirements in the proposed rule were simplified for the
final rule. However, in the final rule the agency did not reduce the
cost estimate for these requirements because the precise amount of time
savings would be difficult to estimate and AMS wanted to avoid
underestimating costs (90 FR 5215).
AMS Response: In the regulatory analysis for the Payment Systems
rule, AMS explained how it arrived at this estimate. AMS also noted
that it does not have sufficient data to predict which complexes would
experience a decline in average grower payments from the previous year.
Because of that uncertainty, the estimate represents an upper bound
scenario. As the analysis in the Payment Systems rule explains, this
likely overstates the burden, since many complexes may not experience a
year-to-year decline and therefore would not need to submit these
materials. AMS used this conservative estimate in this final rule and
the analysis in the Payment Systems rule to make sure the analysis
captured the full potential burden during the transition period. For
this final rule, AMS estimates that the public burden for this
information collection would total approximately $1,572,000 in years
two
[[Page 32317]]
through four representing the maximum amount that AMS could have
overestimated costs to growers.
f. Comments Regarding Congressional Direction
Several comments disagreed with AMS' assertation that the Proposed
Delay aligns with Congressional direction. They argued that because
this provision was part of the explanatory statement included in the
Continuing Appropriations, Agriculture, Legislative Branch, Military
Construction and Veterans Affairs, and Extensions Act, 2026 (Pub. L.
119-37), it does not have the force of law.
AMS Response: Several members of Congress submitted a letter to the
Secretary supporting the delay in implementation of the Payment Systems
final rule on behalf of their constituents, noting the delay is
consistent with the Congressional direction in the explanatory
statement. Conversely, AMS also acknowledges that one member of the
Senate submitted a comment opposing the delay. Nevertheless, it is
typical AMS practice to consider and, to the extent practicable, abide
by Congressional directives provided in explanatory statements and
committee reports accompanying authorizing and appropriating statutes.
This rulemaking aligns with that practice.
g. Arguments That the Proposed Delay Violates the APA
One comment claimed AMS violated the Administrative Procedure Act
by: (1) failing to provide new evidence supporting the delay; and (2)
substantively revising the final rule to extend the compliance date;
this can only be done with a more detailed justification. A commenter
also asserted AMS failed to provide a meaningful opportunity to comment
on the Proposed Delay by limiting the scope of comments to costs and
benefits.
AMS Response: AMS disagrees. AMS included its justification in the
Proposed Delay, explaining that the agency would require additional
time to consider the policy and legal implications of the Payment
Systems rule, especially in light of the rule's significant cost and
the latest Congressional direction. 91 FR 12936.
Additionally, the agency did not limit the scope of comments to
just those related to costs and benefits. While the agency specifically
invited comments and data concerning the benefits and costs of delaying
the effective date of the Payment Systems rule (91 FR 12937), the
agency also generally solicited public comments on its overall proposal
and supporting justifications to delay the effective date of the final
rule to December 31, 2027 (91 FR 12936). The agency received
substantive comments and considered them in this determination to delay
this rule's implementation.
h. Comments Outside the Scope of This Rulemaking
AMS received approximately 125 comments in support of the Payment
System rule and against the Proposed Delay of effective date that
addressed issues beyond the delay of effective date and went to the
substance of the Payment Systems rule. While the current rulemaking is
limited to the delay of Payment Systems rule, AMS appreciates the
comments regarding the merits of the underlying rule and believes the
diversity of views underscore the need for additional consideration.
The agency will consider these comments as it deliberates actions that
may be taken regarding the disposition of the rule.
C. Conclusion
After consideration of all comments received, AMS has decided to
delay the effective date of the final rule until December 31, 2027.
D. Executive Order 12866
This rule has been determined to be ``significant'' under E.O.
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 to December 31,
2027.
AMS will 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 broiler growers; and Sec. 201.290 regarding severability.
Reason for the Final Rule
AMS will 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.\7\
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.\8\ While there is existing literature
on broiler tournaments and grower incentives, there is very little
literature specifically addressing how growers' incentives might change
if performance discounts were not part of the tournament and
variability in performance payments were limited as the Payments
Systems rule requires. LPDs annually spend tens of billions feeding
broilers. If changes to tournament contracts due to the Payment Systems
rule's amendments 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. Delaying the effective date will
allow AMS to consider policy options with less risk of negative effects
on public welfare.
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\7\ See ``Poultry Grower Payment Systems and Capital Improvement
Systems,'' 90 FR 5202, January 16, 2025.
\8\ 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.
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-
[[Page 32318]]
11-1020--General and Operations Managers) for live poultry dealers'
managers, and Legal (3110-23-1011-Lawyers) for attorneys.\9\ 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).\10\
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\9\ 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>.
\10\ See ``Poultry Grower Payment Systems and Capital
Improvement Systems,'' 90 FR 5190, January 16, 2025.
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AMS expects that LPDs will 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 will have approximately $249,000 in ongoing quantified
administrative costs each year. Total ongoing administrative costs will
be $5.2 million for each of the first four years and $4.3 million each
year thereafter.
Regulatory Alternatives Considered
AMS considered three alternatives to the final rule's 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 will remain unchanged; that is,
the Payment Systems final rule will become effective on July 1, 2026.
This first alternative forms the baseline against which AMS compares
the other alternatives.
The second alternative is this final rule. AMS will delay the
effective date of the Payment Systems rule for 18 months. The Payment
Systems rule will 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, but will 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 Final 18-Month Delay of Sec. Sec.
201.106, 110, 112, and 290--Preferred Alternative
With the final rule's 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
incurred before the rule became effective. AMS believes many of these
costs have likely already occurred, and therefore they are not affected
by the delay. The delay will affect recurring costs. The delay will
save live poultry growers and LPDs administrative costs associated with
the ongoing administrative costs that will otherwise occur in the first
18 months after the Payment Systems final rule becomes effective.
Delaying the effective date for 18 months will shift all costs for
both LPDs and growers back by 18 months. This final rule will 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 will 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 Payment Systems final rule became effective. With the effective
date delayed by 18 months, the decrease in costs will be delayed as
well. Costs will be $800,000 higher in the fifth year and $400,000 in
the sixth year for LPDs. This will result in ten-year total cost
savings of $6.1 million for LPDs and $374,000 for poultry growers; a
combined savings of $6.5 million. Table 1 below summarizes cost savings
to poultry growers and LPDs of delaying the effective date of the
Payment Systems rule until December 31, 2027.
Table 1--Quantified Benefits From Savings in Administrative Costs for LPDs, and Poultry Growers From Delaying
the Effective Date of the Payments Systems Rule for 18 Months
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Value Growers ($) LPDs ($) Total ($)
----------------------------------------------------------------------------------------------------------------
First-Year...................................................... 249,000 4,902,000 5,151,000
Ten-Year Total.................................................. 374,000 6,146,000 6,520,000
Ten-Year Net Present Value discounted at 3%..................... 360,000 6,038,000 6,398,000
Ten-Year Net Present Value discounted at 7%..................... 342,000 5,880,000 6,222,000
Annualized Net Present Value discounted at 3%................... 42,000 708,000 750,000
Annualized Net Present Value discounted at 7%................... 49,000 837,000 886,000
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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 final rule represent
the indirect benefits incurred during the 18-month period of the delay
of the effective date. AMS expects that provisions of Sec. Sec.
201.106, 110, and 112 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 will need to change business practices or the
magnitude of any changes that will be required.\11\
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\11\ See ``Poultry Grower Payment Systems and Capital
Improvement Systems,'' 90 FR 5198, January 16, 2025.
---------------------------------------------------------------------------
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 delays 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.
[[Page 32319]]
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 will be foregone in the 18-
month period in which the Payment Systems rule will 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 will 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 will change business
practices or the magnitude of any changes that will be required.
AMS expects broiler growers will 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 will still
occur, they will just be delayed by 18 months. Thus, broiler growers
will 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 final alternative, but the effective date
of the Payment Systems rule will be delayed 12 rather than 18 months.
Under the 12-Month Delay Alternative all costs for both LPDs and
growers will 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 will be $800,000 higher
for LPDs if the effective date is delayed 12 months. The ten-year total
direct administrative cost savings will 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
Ten-Year Net Present Value discounted at 3%..................... 242,000 4,065,000 4,307,000
Ten-Year Net Present Value discounted at 7%..................... 233,000 4,007,000 4,241,000
Annualized Net Present Value discounted at 3%................... 28,000 477,000 505,000
Annualized Net Present Value discounted at 7%................... 33,000 571,000 604,000
----------------------------------------------------------------------------------------------------------------
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 will still occur, they will 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 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 will 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 delay of the effective date of the Payment Systems rule under
the 12-Month Delay Alternative.
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 12-month delay of the effective date. The benefits of the final
rule will still occur, they will 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 is delaying 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 delaying the effective date by 18
months.
E. 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 delaying 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
[[Page 32320]]
Systems rule is scheduled to go into effect on July 1, 2026. This rule
delays implementation until December 31, 2027.
AMS received more than 2,800 comments from producer associations,
poultry and meat industry trade associations, integrated live poultry
dealers, non-integrated poultry dealers, poultry growers, farm advocacy
organizations, and members of the general public. The significant
majority of commenters opposed the Proposed Delay, several supported
it, and the remainder were outside the scope of the Proposed Delay.
There were about 225 unique comments, meaning a comment that was not
replicated by any other comments, and more than 2,600 form letter
comments. AMS did not receive any comments concerning the initial
regulatory flexibility analysis.
Commenters opposed to delaying the effective date of the Payment
Systems rule indicated that a delay is unnecessary and harmful to
growers. Others criticized the benefit analysis of the proposed delay
suggesting that AMS did not consider costs to broiler growers.
Commenter also compared the Payment Systems rule to the Justice
Department's settlement agreement in United States v. Cargill Meat
Solutions Corp. Some commenters did not agree that delaying the Payment
Systems rule was consistent with direction from Congress.
AMS considers the delay to be necessary to consider the cost and
benefits imposed on the industry and assess the legal risk created
under that rule. With the Payment Systems rule, broiler growers are
expected to enjoy most of the benefits, while LPDs bear most of the
costs. Consequently, delaying implementation will benefit LPDs while
costing broiler growers. This is not something AMS ignored or
discounted, and the benefit cost analysis explains how LPDs will
benefit from a delay and broiler growers will not. While there are
similarities between the United States v. Cargill Meat Solutions Corp
consent decree and Payment Systems rule, there are also important
differences and it is not directly comparable to the Payment Systems
rule.
Comments supporting the delay suggested that Payment Systems rule
was based on anecdotal evidence rather than confirmed facts. Commenters
suggested that LPDs have no reason to provide broiler growers with
substandard inputs. Comments were also critical of the benefit cost
analysis suggesting that AMS underestimated costs such as contract
renegotiations, information technology changes and increased litigation
risk, which could ultimately lead to higher consumer prices. Another
commenter indicated that the Payment Systems rule did not adequately
consider small LPDs that are not vertically integrated.
The final rule: (1) prohibits live 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.\12\ 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.
---------------------------------------------------------------------------
\12\ See ``Poultry Grower Payment Systems and Capital
Improvement Systems,'' 90 FR 5198, January 16, 2025.
---------------------------------------------------------------------------
AMS is delaying 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.\13\
---------------------------------------------------------------------------
\13\ 13 CFR part 121.
---------------------------------------------------------------------------
AMS maintains data on LPDs from the annual reports \14\ 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.
---------------------------------------------------------------------------
\14\ Live poultry dealers are required to file form PSD 3002,
``Annual Report of Live Poultry Dealers'' (OMB Control No. 0581-
0308), with AMS.
---------------------------------------------------------------------------
Delaying implementation of the Payment Systems rule will not cause
significant costs for any LPD. LPDs will still be required to comply
with Sec. Sec. 201.106, 110, and 112 of the regulations, but will have
until December 31, 2027, to do so. The regulations place restrictions
on the way LPDs' contract with growers. Delaying implementation will
give LPDs more time to make changes to their business practices to
comply with the new regulations. No LPD, whether small or large, will
be required to change any practices as result of this 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.
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.\15\ 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).\16\
---------------------------------------------------------------------------
\15\ 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>.
\16\ See ``Poultry Grower Payment Systems and Capital
Improvement Systems,'' 90 FR 5190, January 16, 2025.
---------------------------------------------------------------------------
Direct Cost Savings/Benefits to Small LPDs of the Final Rule's 18-Month
Delay of Sec. Sec. 201.106, 110, 112, and 290--Preferred Alternative
With the 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 will 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.
The delay will affect recurring costs. Delaying the effective date
of the final rule will enable LPDs to avoid annual administrative costs
that will otherwise occur in the first 18 months after the Payment
Systems rule becomes effective. Delaying the effective date for 18
months will shift all costs for small
[[Page 32321]]
LPDs back by 18 months. This final rule will 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 will otherwise become effective.
They will 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 will 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 will be $36,000
higher for small LPDs. This will 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 preferred alternative, but the effective
date of the Payment Systems rule will be delayed 12 rather than 18
months. Under the 12-Month Delay Alternative all costs for small LPDs
will 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 will be $72,000 higher for
small LPDs if the effective date is delayed 12 months. The ten-year
total direct administrative cost savings will 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
Ten-Year Net Present Value 508,000 755,000
discounted at 3%...................
Ten-Year Net Present Value 497,000 730,000
discounted at 7%...................
Annualized Net Present Value 60,000 88,000
discounted at 3%...................
Annualized Net Present Value 71,000 104,000
discounted at 7%...................
Per Entity:
First-Year.......................... 24,000 24,000
Ten-Year Total...................... 21,000 32,000
Ten-Year Net Present Value 21,000 31,000
discounted at 3%...................
Ten-Year Net Present Value 21,000 30,000
discounted at 7%...................
Annualized Net Present Value 2,000 4,000
discounted at 3%...................
Annualized Net Present Value 3,000 4,000
discounted at 7%...................
------------------------------------------------------------------------
Threshold Analysis
LPDs report net sales in Annual Reports to AMS.\17\ 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
delaying the effective date of the Payment Systems rule 18 months will
not be significant. Savings will be largest for the smallest quartile,
but not significant. First-year cost savings for the smallest quartile
will be 0.24 percent of net revenues. Annualized savings are less than
the first-year cost savings.
---------------------------------------------------------------------------
\17\ 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 net Ten year net
present value present value
Average net First-Year total annualized at annualized at
Quartile sales as a percent of 3 percent as a 7 percent as a
net sales percent of net percent of net
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
----------------------------------------------------------------------------------------------------------------
[[Page 32322]]
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 will 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 will be very similar to
the preferred alternative, but because the delay is shorter, the
benefits to LPDs will be less. The table below indicates that neither
first-year cost savings to LPDs nor annualized cost savings will 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 will likely experience
indirect benefits from delaying the effective date of the Payment
Systems rule. The benefits will be similar to those associated with the
preferred alternative, but because the time delay is shorter in the 12-
Month Delay alternative, the benefits will 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 net Ten-Year net
present value present value
Average net First-Year total annualized at annualized at
Quartile sales as percent of 3 percent as a 7 percent as a
net sales percent of net percent of net
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 will 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 delaying 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 delaying
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.
F. 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 by the
delayal of the effective date of the Payment Systems rule. Accordingly,
no additional OMB clearance under the Paperwork Reduction Act is
needed.
G. Civil Rights Impact Analysis Statement
In accordance with Executive Order 14281, titled ``Restoring
Equality of Opportunity and Meritocracy,'' issued on April 23, 2025 (90
FR 17537, April 28, 2025), this Civil Rights Impact Analysis will not
reference any adverse, disparate, or disproportionate impacts on
protected groups. Additionally, analyses that examine such impacts on
these groups will not be conducted for this Civil Rights Impact
Analysis, despite being required by section 12403 of the Agriculture
Improvement Act of 2018. According to section 2501A of the Food,
Agriculture, Conservation, and Trade Act of 1990, the Department of
Agriculture is required to collect and analyze data on program
applications and participation rates for each program that serves
agricultural producers and landowners. This data has been included in
the Civil Rights Impact Analysis. The focus of this Civil Rights Impact
Analysis is providing mitigation, outreach, and monitoring Strategies
to minimize and/or eliminate potential impacts on individuals who are
members of protected groups.
H. Executive Order 12988
This rule is not intended to have a retroactive effect. This rule
would not preempt any State or local laws, regulations, or policies
unless they present an irreconcilable conflict with this rule.
I. Executive Order 13175
E.O. 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
[[Page 32323]]
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
rule. AMS does not find that this rule 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 E.O. 13175.
J. 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.
K. 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 rule 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.
L. Congressional Review Act
Pursuant to subtitle E of the Small Business Regulatory Enforcement
Fairness Act of 1996 (also known as the Congressional Review Act, 5
U.S.C. 801 et seq.), OMB has determined that this rule does not meet
the criteria set forth in 5 U.S.C. 804(2).
Erin Morris,
Administrator, Agricultural Marketing Service.
[FR Doc. 2026-10880 Filed 5-28-26; 4:15 pm]
BILLING CODE P
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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.