Friday, October 06, 2006

Exempting agriculture: The story of National Broiler Marketing Association v. United States

Broiler productionNational Broiler Marketing Association v. United States, 436 U.S. 816 (1978), illustrates two possible approaches for interpreting the meanings of ambiguous terms such as “farming” and “agricultural production.” The issue in National Broiler was whether National Broiler Marketing Association (NBMA) members were “persons engaged in the production of agricultural products” and thereby exempt from federal antitrust regulations. NBMA members were processors and producers of broiler chickens, who employed independent contractors to raise the broiler chickens.

It was unclear whether the agricultural exemption from federal antitrust regulations applied to NBMA members for a couple of reasons. First, NMBA members managed the production of broiler chickens but were not involved in the day-to-day operations of raising the broiler chickens. It was unclear whether NMBA members were sufficiently “engaged in the production of agricultural products,” given their lack of day-to-day involvement.

BroilerSecond, NBMA members managed both the production and processing phases of producing broiler chickens for market. It was unclear whether the agricultural exemption applied only to persons solely engaged in agricultural production or whether the exemption also applied to persons engaged in both agricultural production and processing.

Both the majority and dissent in National Broiler recognized that the meaning of the term “agricultural production” was ambiguous. The National Broiler majority engaged in static interpretation, turning to the intent of the original authors to resolve this ambiguity. The intent of the original authors, according to the majority, was to protect individual farmers -- not processors:
Farmers were perceived to be in a particularly harsh economic position. They were subject to the vagarities of market conditions that plague agriculture generally, and they had no means individually of responding to those conditions….Farmers were seen as being caught in the hands of processors and distributors who, because of their position in the market and their relative economic strength, were able to take from the farmer a good share of whatever profits might be available from agricultural production. By allowing farmers to join together in cooperatives, Congress hoped to bolster their market strength and to improve their ability to weather adverse economic periods and to deal with processors and distributors.
National Broiler, 436 U.S. at 825-26.

In fact, according to the majority, Congress “roundly rejected” “several attempts” to expand the agricultural exemption to include some processors as well as farmers. Id. at 826. The National Broiler majority held that those NBMA members who were processors as well as producers of broiler chickens were not covered by the agricultural exemption from federal antitrust laws. That is, these NBMA members were not “persons engaged in the production of agricultural products” as this phrase was used in the statute. To interpret the agricultural exemption more broadly would conflict with the original authors’ intent to not protect processors.

Retail food chainsIn contrast, the National Broiler dissent engaged in dynamic interpretation, focusing on what seemed fair and workable in 1978 and was consistent with the statute’s purpose. The National Broiler dissent emphasized that the agricultural industry had changed substantially since the 1920s and asserted that the agricultural exemption should be interpreted in light of the changed economy. Specifically, the dissent noted that by 1978 processors were in a weak economic position in relation to economically powerful buyers (large retail chains and institutional food outlets).

Thus, the National Broiler dissent concluded that it was fair and workable to extend the agricultural exemption to protect persons who were processors/producers as well as persons who were solely producers. The dissent asserted that this interpretation was consistent with the purpose of the agricultural exemption, which the dissent identified as protecting all agricultural sellers (both individual producers and processors/producers) who were operating in a buyers’ market with boom and bust cycles.

The disagreement between the majority and dissent in National Broiler illuminates the main issue facing courts when interpreting terms such as “farming” and “agricultural production”: whether courts should update statutes to reflect changes in the structure of the agricultural industry when Congress has failed to do so. Neither the majority’s nor the dissent’s resolution of this issue feels satisfactory. The majority’s static interpretation approach is unsatisfactory because the public policies of 1922 legislators are unlikely to generate the best approach for regulating agriculture today, given the dramatic changes that the agricultural industry has undergone since 1922. On the other hand, the dissent’s proposal to extend the agricultural exemption is even more troubling. The dissent proposes amending the federal antitrust laws to accord with its own public policy preferences. The dissent is unconstrained by the statutory context in which the phrase “persons engaged in the production of agricultural products…” is used, the legislative history of the statute, past precedent, or the purpose of federal antitrust legislation.