[Congressional Record Volume 148, Number 117 (Tuesday, September 17, 2002)]
[Senate]
[Pages S8677-S8678]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. FEINGOLD (for himself, Mr. Grassley, Mr. Harkin, Mr. 
        Leahy, and Mr. Enzi):
  S. 2943. A bill to amend title 9, United States Code, to provide for 
greater fairness in the arbitration process relating to livestock and 
poultry contracts; to the Committee on the Judiciary.
  Mr. FEINGOLD. Mr. President, I rise today with my friend from Iowa to 
introduce legislation to give farmers options in identifying a forum to 
resolve disputes with agribusinesses.
  This legislation is based on our amendment to the Senate-passed Farm 
Bill that was unfortunately stripped in the conference committee. Our 
amendment passed by a vote of 64-31, yet it was ultimately taken out 
due to objections by large agribusiness companies in the backroom 
negotiations.
  While our effort then was not successful, I am hopeful that we will 
be able to pass this legislation and begin to give farmers a fair shot 
in the marketplace.
  I am deeply concerned that the concentration of power in the hands of 
a few large agribusiness firms, companies that can raise a billion 
dollars on Wall Street at the drop of a hat, is forcing farmers and 
ranchers to be placed at a competitive disadvantage in the marketplace.
  These large corporations are using their market power to force 
independent producers into a position of weakness through unfair 
contracts and other uses of market leverage.
  In some cases, the domestic marketplace has become almost 
noncompetitive for the family farmer. Farmers have fewer buyers and 
suppliers than ever before. One indication of this dominance is one-
sided contracts that favor agribusinesses at the expense of farmers and 
ranchers.
  It is of paramount importance that we help restore competition in 
rural America. One way to promote competition is to ensure that farmers 
have a choice of forums to resolve disputes with agribusinesses.
  While alternative methods of dispute resolution such as arbitration 
can serve a useful purpose in resolving disputes between parties, I am 
extremely concerned about the increasing trend of stronger parties to a 
contract forcing weaker parties to waive their legal rights and agree 
to arbitrate any future disputes that may arise.
  It recently came to my attention that large agribusiness companies 
often present producers with ``take it or leave it'' contracts, which 
increasingly include mandatory and binding arbitration clauses. This 
practice forces farmers to submit their disputes with packers and 
processors to arbitration.
  As a result, farmers are required to waive access to judicial or 
administrative forums, substantive contract rights, and statutorily 
provided protections. In short, this practice violates the farmers' 
fundamental due process rights and runs directly counter to basic 
principles of fairness.
  Arbitration is billed as an inexpensive alternative to civil 
lawsuits. The opposite, however, is often the case. Filing fees and 
other expenses in arbitration result in much higher costs for the 
parties than civil actions. Attorney fees, whether hourly or 
contingency, are similar regardless of forum.
  For example, in a recent Mississippi case, filing fees for a poultry 
grower to begin an arbitration proceeding were $11,000. This is far 
more than the $150 to $250 cost of filing in civil court. It makes no 
sense for a farmer to seek payment for wrongdoing when he or she has 
lost $10,000, when it costs

[[Page S8678]]

$11,000 just to get the case before an arbitrator.
  The practical result of these mandatory arbitration clauses is that 
farmers have no forum in which to bring their dispute against the 
company. Arbitration clauses require farmers to waive their right to a 
jury trial and bring a dispute only in a forum that my be cost-
prohibitive. Farmers, who likely have substantial debts due to low 
prices and large mortgages on their farms, are often left without any 
recourse even in a case where the agribusiness has plainly acted 
illegally.
  With the litigation option taken away by contract and the arbitration 
forum taken away by economics, the grower has no forum in which to 
bring his or her dispute against the company. The net result of these 
mandatory arbitration clauses is that the farmer always loses.
  If poultry farmers lose their farms as a result of a mis-weighed 
animal, they should have the right to hold the company accountable. 
When farmers are hurt because they have received bad feed, we must 
ensure that they are able to choose the forum through which they can 
resole their concerns.
  If farmers believe they have been provided diseased animals from an 
agribusiness, they should at least have a forum in which to voice their 
concerns.
  In short, we must give farmers a fair choice that both parties to an 
agricultural contract may willingly and knowingly select. This 
legislation therefore does not prohibit arbitration. It simply ensures 
that the decision to arbitrate is truly voluntary and that the rights 
and remedies provided for by our judicial system are not waived under 
coercion.
  I urge my colleagues to join me in this legislation and give farmers 
options to resolve disputes in the agriculture marketplace.
  There being no objection, the bill was ordered printed in the Record, 
as follows:

                                S. 2943

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Fair Contracts for Growers 
     Act of 2002''.

     SEC. 2. ELECTION OF ARBITRATION.

       (a) In General.--Chapter 1 of title 9, United States Code, 
     is amended by adding at the end the following:

     ``Sec. 17. Livestock and poultry contracts

       ``(a) Definitions.--In this section:
       ``(1) Livestock.--The term `livestock' has the meaning 
     given the term in section 2(a) of the Packers and Stockyards 
     Act, 1921 (7 U.S.C. 182(a)).
       ``(2) Livestock or poultry contract.--The term `livestock 
     or poultry contract' means any growout contract, marketing 
     agreement, or other arrangement under which a livestock or 
     poultry grower raises and cares for livestock or poultry.
       ``(3) Livestock or poultry grower.--The term `livestock or 
     poultry grower' means any person engaged in the business of 
     raising and caring for livestock or poultry in accordance 
     with a livestock or poultry contract, whether the livestock 
     or poultry is owned by the person or by another person.
       ``(4) Poultry.--The term `poultry' has the meaning given 
     the term in section 2(a) of the Packers and Stockyards Act, 
     1921 (7 U.S.C. 182(a)).
       ``(b) Consent to Arbitration.--If a livestock or poultry 
     contract provides for the use of arbitration to resolve a 
     controversy under the livestock or poultry contract, 
     arbitration may be used to settle the controversy only if, 
     after the controversy arises, both parties consent in writing 
     to use arbitration to settle the controversy.
       ``(c) Explanation of Basis for Awards.--If arbitration is 
     elected to settle a dispute under a livestock or poultry 
     contract, the arbitrator shall provide to the parties to the 
     contract a written explanation of the factual and legal basis 
     for the award.''.
       (b) Technical and Conforming Amendment.--The table of 
     sections for chapter 1 of title 9, United States Code, is 
     amended by adding at the end the following:

``17. Livestock and poultry contracts.''.

     SEC. 3. EFFECTIVE DATE.

       The amendments made by section 2 shall apply to a contract 
     entered into, amended, altered, modified, renewed, or 
     extended after the date of enactment of this Act.
                                 ______