Josh Funk/AP Photo
Workers carve up beef at stations separated by plastic dividers at the Greater Omaha Packing processing plant in Omaha, Nebraska, November 2, 2022.
The United States Department of Agriculture (USDA) has yet to implement a proposed rule introduced nearly a year ago that would impose improved labor standards for department contractors. Labor and environmental groups initially celebrated the rule as a landmark reform for federal contracting but are now questioning the department’s commitment to seeing its codification.
“We believe that failing to enact this common-sense proposal will continue to reinforce the race-to-the-bottom that puts employers taking the higher road at a disadvantage in competing for government solicitations that prioritize cost-savings above overall public value,” said retired judge Laura Safer Espinoza of the Fair Foods Standards Council in a statement to the Prospect.
According to numerous groups that spoke to the Prospect, Agriculture Secretary Tom Vilsack’s recent refusal to impose penalties against one of the agriculture industry’s most egregious violators casts doubt on the rule’s future. In 2020, JBS USA’s parent company, J&F Investimentos, pleaded guilty under the Foreign Corrupt Practices Act and paid $256 million in fines to the U.S. for bribing Brazilian government officials.
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Despite the company’s bribery admission and a history of repeated labor violations, in a previously undisclosed letter reported by Politico, Secretary Vilsack told Congress in November that the department would not terminate a contract with food processor JBS USA. Vilsack cited the lack of competition in the meatpacking industry, and the downstream economic effects on school lunch programs, veterans, and taxpayers at large if the contract were ended.
A week after Vilsack’s letter to Congress, the Department of Labor filed a complaint against a sanitation subcontractor of JBS for the use of child labor at two of its slaughterhouses and meatpacking facilities in Minnesota and Nebraska. After a federal court in Nebraska issued a permanent injunction on the subcontractor, JBS earlier this month canceled its agreement with the sanitation company.
Labor advocates argue that this recent incident is part of a recurrent pattern with USDA contractors. It highlights the need for the USDA to enact the proposed rules to crack down on its vendors’ abuse of workers. “What we’re trying to accomplish with this rule is that your kid’s school lunch program won’t be coming from egregious practices like child labor,” Chloë Waterman, senior program manager at Friends of the Earth, told the Prospect.
When questioned by the Prospect, the USDA addressed its continued work on the rule: “We are working diligently with our partners both in and out of government to get a clause added to our Agriculture Acquisition Regulation (AGAR) which would do more to hold some government contractors accountable for upholding fair workplace employment and safety legal standards that are part of the Nation’s history and tradition.”
The rule would add baseline worker protections to the department’s regulations for companies contracted through the Commodity Procurement Program, which delivers subsidized school lunches and meals for veterans. With the insertion of two main clauses into contract agreements, as the new rule proposes, USDA vendors would have to certify that they aren’t flouting labor laws at their worksites or the ones run by subcontractors, at least knowingly. Federally contracted companies would also be required to document past labor violations and demonstrate that they had remedied the offenses.
Food contracts have reinforced agriculture monopolies by shutting smaller players out of lucrative deals.
Though the rule may seem modest, it would nonetheless open the opportunity for the department to take action against contractors. It would be the first of its kind and could become a model to spread to other federal departments, provided it withstands the expected legal challenges from industry groups typically hostile to any regulation.
The two clauses function as a trip wire, potentially triggering the False Claims Act if a contractor engaged in worker abuses after signing on to a federal contract. A documented labor infraction under this agreement would empower the USDA’s contract officers to take swift legal action, perhaps even prosecuting known violators.
THE MOMENTUM BEHIND THIS RULE at the USDA crystalized during the pandemic. In October 2021, Investigate Midwest reported that 86,000 workers tested positive for COVID-19 and 423 worker died throughout the meatpacking industry. During the pandemic’s earliest days, counties with meatpacking plants saw ten times as many cases compared to counties without such facilities, according to a USDA study.
While the Department of Labor oversees most of what happens to workers inside slaughterhouses or out on the farms, the USDA has wide authority over its contracting methods, which hold sway in shaping the agriculture industry’s practices. The network of contracts for procurement has come under scrutiny from a number of outside groups led by the United Food and Commercial Workers (UFCW), Friends of the Earth, and the Coalition of Immokalee Workers. These groups have urged the department to leverage its procurement system to support the Biden administration’s broader policy goals of supporting small farmers and workers, as well as reducing the carbon footprint of the agriculture sector.
The USDA’s food program delivers a $1.3 billion windfall to industrial agriculture, the vast majority of which goes to just 15 companies, mostly meat and dairy conglomerates. The food processor giant Tyson Foods alone takes in nearly a tenth of the program’s overall spending. Instead of backstopping big industry players, the spending could buttress independent farmers and diversify agriculture production.
Goods procurement is another tool the department could wield to advance the anti-monopoly directives outlined in the Biden administration’s executive order on competition. Decades of lax antitrust enforcement have allowed for horizontal and vertical integration of the national food system into just a handful of food processors and meatpackers.
Food contracts have reinforced these agriculture monopolies by shutting smaller players out of lucrative deals. Now, the USDA has made steps toward reviving antitrust law through ongoing rulemaking to update the Packers and Stockyards Act, which gives the department power to regulate unfair and deceptive competition.
The large food processors that receive the lion’s share of the department’s procurement funds also happen to have the highest number of EPA and OSHA violations, according to data compiled by Friends of the Earth. At the very least, groups are calling on the department to stop showering taxpayer dollars on agriculture giants with a poor record on worker protections and environmental standards.
“Breaking the law is a very clear unfair method of competition, and the department could reform its contracting to help remedy that imbalance,” said Claire Kelloway, the program manager for fair foods and farming systems at the Open Markets Institute.
By implementing fair labor standards, the department could level the playing field for smaller companies competing for contracts that don’t cut corners on safety conditions or worker pay. The USDA’s proposed rule would take steps toward doing just that.
Despite the simple ask of contractors to merely assert that they’re not breaking existing law, the rule has received fierce though not unexpected backlash from industry groups and the U.S. Chamber of Commerce. In part, the pushback is intended to settle a score from the Obama administration. In 2014, Obama unveiled the Fair Pay and Safe Workplaces executive order, on which the USDA’s proposed rule is modeled. The order was immediately dubbed a “blacklist” by business organizations that challenged it on grounds of double jeopardy. They claimed that companies had already been fined for the labor abuses and thus shouldn’t be penalized in government contracting as well. The order was dragged through a legal battle and eventually repealed in 2017 by former President Trump.
According to USDA officials, the scars from that legal challenge still mar the department, which has taken a cautious approach to insulate the rule from lawsuits so that, unlike Obama’s, it can have staying power. As a result, the rule has already been pared down from the original proposal. Initially, it would have covered the department’s contracts in services and commodities, but after opposition from the construction industry, the department is narrowing the proposed rule to just commodities.
Advocacy groups see the rule as a bare-minimum benchmark in assessing whether Secretary Vilsack is serious about tackling other ambitious policy goals. Espinoza told the Prospect, “Far from creating any kind of so-called blacklist, the proposed rule provides ample opportunity for any contractor with adjudicated violations in their supply chain to demonstrate that they have taken adequate steps to correct those violations, and thereby remain eligible for USDA contracts.”
A chorus of labor advocates criticized Vilsack’s appointment as secretary in 2021. Many still harbor reservations about his commitment to labor because of a push he made as secretary during the Obama administration to increase slaughter-line speeds in poultry plants, which can heighten the risk of worker injuries. Vilsack’s unwillingness to terminate the JBS contract has only amplified those fears, raising concerns about the prospects of implementing the contracting rule and whether it’ll end up having any teeth once finalized.
Even before the recent bribery case, JBS’s parent company and its subsidiaries had notched 14 OSHA violations as of 2020, three of which led to fines of more than $40,000. In one 2021 incident, OSHA cited JBS Foods for repeated safety failures that led to the death of a worker on the job at its Greeley, Colorado, facility. If the USDA’s intention is to get tough on contractors, it doesn’t send a particularly strong message to give a pass to a contractor with one of the highest numbers of citations for worker harms.
As Waterman said, “I don’t understand how in one arm of government we can be punishing companies for flagrantly violating laws and then on the other continuing to reward them with no repercussions.”
