Iowa Enters Into Consent Decree with Christensen Farms

On March 30, 2011, the Federal District Court for the Southern District of Iowa approved a consent decree between the State of Iowa and Christensen Farms Midwest, LLC (Christensen).  Christensen had sued Iowa on a claim that the portion of the Iowa anti-corporate farming law governing the contract production of livestock (Iowa Code Section 202B.201) is unconstitutional.  That mirrored previous claims against the law beginning in 2002 by Smithfield Foods and other hog producers.  A prior version of the law had been declared unconstitutional by a federal court in 2003 and the legislature then retooled the provision to remove the constitutional defect during the 2003 session.  But, the Iowa A.G.'s office didn't further enforce the reworked provision and entered into a consent agreement with Smithfield that prohibited enforcement of the law against Smithfield in return for certain concessions by Smithfield for a term of years.  The A.G. subsequently entered into similar consent agreements with Cargill (2006), Hormel (2006), and Tyson (2009).  Those agreements lay out the rights of contract producers and largely mirror rights given contract producers by the 2008 Farm Bill, in addition to providing growers with more information concerning how they are to be compensated and protections for capital investments in grower facilities.  

 

The Christensen Farms consent decree is similar to the prior consent agreements with the other firms and gives Christensen Farms the ability to enter into pork processing in Iowa.  Christensen Farms will be able to expand its hog production activities in Iowa along with its harvesting activities in Missouri.  Interestingly, the release provision of the consent decree specifies that the State of Iowa "releases, remises, acquits, and forever discharges CF, ... for any and all damages or losses or other claims... including fines or penalties... on account of, or arising out of or relating to any alleged violation of Iowa Code Section 202B.201 as it stands at the time of the entry of this Consent Decree, as it stood at any time prior to this Consent Decree, or may stand in the future."  The last part of that quoted language is interesting.  The A.G. has agreed to never enforce any future version of the statute against Christensen.  That takes the issue away from the legislature.  Whether that is permissible for the A.G. to do is a significant question, because the phrase basically takes policy decision-making on this issue from the legislature and vests it with the A.G. in perpetuity.  That may end up getting modified or litigated.

 

Stay tuned.  Christensen Farms Midwest, LLC v. Miller, No. 4:11-cv-145 (S.D. Iowa Mar. 30, 2011).