CONTACT:
Erica Chabot
Erica_Chabot@Judiciary-dem.senate.gov

WASHINGTON – Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) sent a letter Tuesday to Attorney General Eric Holder, requesting information on the Department’s investigation into the Peanut Corporation of America (PCA).  In 2009, more than 2,000 products containing peanuts processed at PCA were recalled for possible salmonella contamination.  A Food and Drug Administration report stated that PCA knowingly sold peanut products containing salmonella.

Tainted products processed by the Peanut Corporation of America caused more than 700 people to fall ill and resulted in the deaths of nine people.  The president of PCA, Stewart Parnell, refused to testify before Congress about the contamination.  A 7-year-old South Burlington, Vermont, boy fell ill from salmonella tainted products from PCA, and in 2009, his mother, Gabrielle Meunier testified before the Senate Agriculture Committee about her son’s illness.  Leahy is a senior member of the Agriculture Committee.

“Two years ago, I wrote to the Department urging a full criminal investigation into this matter,” wrote Leahy.  “At the time, the Department was unable to comment with specificity but confirmed that an investigation was ongoing and that it was uncertain whether additional legal authorities were needed…I hope that there has been a thorough criminal investigation into PCA’s conduct at the least, and that if appropriate, criminal charges are aggressively pursued. To the extent possible consistent with ongoing investigations, I request an update on the Department’s investigation into the PCA matter.”

Leahy is the author of the Food Safety Accountability Act, which would strengthen criminal penalties against those who knowingly violate food safety standards, imposing stricter prison sentences and fines for individuals or corporations that contaminate the nation’s food supply by knowingly distributing contaminated food products with a disregard for consumer safety.  Recent recalls of tainted food products, including nationwide recalls of certain eggs and peanut products, led Leahy to first introduce legislation in July 2010.  The Senate Judiciary Committee, which Leahy chairs, unanimously approved the legislation in September 2010, but the Senate failed to act on the bill.  Leahy reintroduced the legislation in January.

The text of Leahy’s letter to Attorney General Holder follows.  A PDF is available online.

# # # # #

February 22, 2011

The Honorable Eric H. Holder Jr.
Attorney General
United States Department of Justice
950 Pennsylvania Avenue, N.W.
Washington, D.C. 20530-0001

Dear Attorney General Holder:

I write regarding the Department of Justice investigation into the activities of the Peanut Corporation of America (“PCA”), and its president, Stewart Parnell, in connection with the 2009 salmonella outbreak that has been linked to the death of nine people and sickened more than 700 others. Last summer’s salmonella outbreak from contaminated eggs served as an unfortunate reminder that there continue to be corporations and individuals that place profitability above public safety. When crimes are committed, such wrongdoers must be held fully accountable for their actions.

The Food and Drug Administration has determined that PCA knowingly distributed potentially contaminated peanuts for use in hundreds of different food products even after samples tested positive for salmonella more than a dozen times in the two years before the outbreak. In addition to knowingly selling these tainted products, evidence suggests that PCA also shopped for a laboratory that would provide the acceptable results they were seeking after initial tests found their products to be contaminated. I believe that it is critical for the Department of Justice to determine whether these actions rise to the level of criminal conduct.

Two years ago, I wrote to the Department urging a full criminal investigation into this matter. I also followed up with a letter to you asking whether the Department needs any additional authorities to protect the American people from the distribution of contaminated food products, and another letter in response to the announcement that more than two million pounds of pistachios were recalled due to possible salmonella contamination.  At the time, the Department was unable to comment with specificity but confirmed that an investigation was ongoing and that it was uncertain whether additional legal authorities were needed.

Given the PCA investigation, the pistachio recall, and last summer’s salmonella outbreak from eggs, my concerns remain that wrongdoers are disregarding the health and safety of American consumers by choosing to sell contaminated products.  I hope that there has been a thorough criminal investigation into PCA’s conduct at the least, and that if appropriate, criminal charges are aggressively pursued. To the extent possible consistent with ongoing investigations, I request an update on the Department’s investigation into the PCA matter.

Last year, Congress took significant steps to reform our food safety system in a meaningful way, but our work is not done.  I have introduced legislation to hold criminals who poison our food supply accountable for their crimes by increasing the sentences that prosecutors can seek for certain violations of our food safety laws. Given the seriousness of the recent nationwide recalls and salmonella outbreaks, I would also ask that you, as the Attorney General continue to review the existing legal structure for addressing the distribution of contaminated food products and then advise me if the Justice Department needs any additional tools to protect the American people.

Sincerely,

PATRICK LEAHY

Chairman

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(Montpelier) – A Vermont attorney is going to the White House. Grace Pazdan, a staff attorney at Vermont Legal Aid assists Vermonters whose homes are at risk of foreclosure. The White House Task Force on Middle Class Working Families and the Department of Justice Access to Justice Initiative are hosting a summit to share and discuss strategies to bolster the middle-class, and in particular to help middle-class families weather the recession and secure their legal rights. Advocates from across the country will gather at the White House to hear from Vice President Joe Biden, Attorney General Eric Holder, and other Administration officials on Friday, November 19, 2010 from 10:30 a.m. – 1:00 p.m. The Department of Justice tapped Pazdan to attend because of her work representing families in foreclosure, and because of an innovative new foreclosure mediation law that she advocated for in Vermont.

“Legal Aid is honored to participate in this conference,” said Eric Avildsen, Executive Director of Vermont Legal Aid. “Vermont families are working hard to keep their homes, their jobs, and provide for their kids,” he said. “We are absolutely committed to advocating for common sense solutions to the myriad economic problems confronting the middle class and working Vermonters,” said Avildsen. “This conference is a great opportunity for Grace to share some of what we have accomplished in Vermont, and to hear what other states are doing, and to find out how the Administration can help,” he said.

The Vermont legislature recently passed a new law mandating foreclosure mediation for home loans subject to the federal Home Affordable Modification Program, or “HAMP.” “Vermont has a long history of encouraging and supporting homeownership,” said Pazdan. “The new foreclosure mediation law continues that tradition by ensuring families are not unnecessarily forced out when a better course is to simply modify the loan to an affordable payment and stabilize families and neighborhoods while ensuring continued payment to lenders,” she said. “Foreclosure mediation is designed to be a “win-win” benefitting homeowners and lenders alike,” she added.

“Over the last few years the number of foreclosures in Vermont has almost doubled and Legal Aid has had to devote more resources to respond to this crisis,” said Avildsen. That work has been supported through a coordinated effort by the Vermont Access to Justice campaign, and the Vermont Bar Association. “Those resources have been critical to our success,” said Avildsen. “As a result, many families have avoided foreclosure altogether,” he said.

About the White House Task Force on Middle Class Working Families: The Task Force is a major initiative targeted at raising the living standards of middle-class, working families in America. It is comprised of top-level administration policy makers, and in addition to regular meetings, it will conduct outreach sessions with representatives of labor, business, and the advocacy communities. The Task Force will be chaired by Vice President Joe Biden. The Vice President and members of the task force will work with a wide array of federal agencies that have responsibility for key issues facing the middle class and expedite administrative reforms, propose Executive orders, and develop legislative and policy proposals that can be of special importance to working families.

Members of the Middle Class Task Force include: Vice President Biden, Chair; the Secretaries of Labor, Health and Human Services, Education, Treasury, Commerce, Housing and Urban Development, Transportation, and Agriculture; as well as the Directors of the National Economic Council, the Office of Management and Budget, the Domestic Policy Council, and the Chair of the Council of Economic Advisors

Goals of the task force:

Expanding education and lifelong training opportunities

Improving work and family balance

Restoring labor standards, including workplace safety

Helping to protect middle-class and working-family incomes

Protecting retirement security

Source: Vice-President of the United States, Middle Class Task Force (available at: http://www.whitehouse.gov/strongmiddleclass/blog?page=11).

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Senators say dairy industry consolidation hurting farmers

Sen. Patrick Leahy and Sen. Bernie Sanders listen to testimony at the Senate Judiciary Committee hearing on antitrust issues in the dairy industry on Saturday in St. Albans. Photo by Terry J. Allen.

A lack of competition may allow dominant dairy processors to “exert power” and depress the price farmers receive for raw milk, according to Christine Varney, the assistant attorney general for the Antitrust Division of the U.S. Department of Justice, who spoke at a congressional hearing held in St. Albans on Saturday.

The largest dairy processor in the country, Dean Foods, buys 70 percent of the milk produced in the Northeast. Sen. Bernie Sanders, I-Vt., has asked the Department of Justice to investigate the Dallas-based corporation’s alleged anti-competitive market practices.

Sen. Patrick Leahy, D-Vt., who called the hearing as part of a congressional investigation into “anti-competitive” dairy industry practices, asked Varney if that level of industry buying power “bothers” her.

“Competition is not very well served when you have one player in the market who controls 70 percent of the market,” Varney said. “We look very carefully at the activity in a market when you have that kind of dominance.”


Varney explained to the audience of 100 people in the St. Albans City Hall that some dairy processors have become “vertically integrated.” These manufacturers not only process raw milk, but also may own parts of the supply chain “such as distribution of its products or supply of its inputs.”

“Vertical relationships in dairy markets would include, for example, a processor entering into exclusive agreements with a specific cooperative to buy raw milk,” Varney testified.

Varney said her division would pursue an investigation of anti-trust violations allegedly perpetrated by dairy processors and would examine complaints about a lack of transparency in the industry as a whole.

“Transparency is something we all need in order to understand how we can improve the production, the health and life of the dairy industry in the United States,” Varney said.
Leahy and Sanders reiterated that Dean Foods has reaped enormous profits this year at a time when dairy farmers are facing a rip tide of red ink and going deep into debt to stay afloat.

Milk prices, which have reached 30-year lows, hovering in the $11 per hundredweight range are not expected to reach $15 per hundredweight until next summer according to USDA economists.
Meanwhile the cost to produce raw milk in Vermont has remained high – at around $18 per hundredweight – partly because farmers must buy more grain here due to the state’s short growing season.

As a result of this whipsaw of low prices and high costs, agricultural economist Bob Parsons at UVM Extension has said Vermont could lose 150 farms in the coming year.

Willard Rowell, owner of Green Mountain Dairy in Highgate, testified on Saturday that his farm will likely lose $1.6 million this year. He and his family milk 900 cows. Last year their income was $2.5 million.

Paul Doton, who milks about 60 cows with his wife and son on their 200-acre farm in Barnard, says he is scraping by because he sells maple syrup, vegetables and does some custom mowing and snowplowing.

“Without this income, I would already be out of business,” Doton said. “Doton farm, much like many other Vermont farms, cannot hang on much longer. How long can we go on losing $4,500 per month? My answer is – not long at all.”

Dean Foods reported first quarter profits of $76.2 million this year, up 147 percent above its reported earnings in the same quarter in 2008, Sanders reported at the hearing.

Sanders said the corporation paid its CEO, Gregg Engles, $116.38 million over the last five years.

“What we are seeing in recent years is a growing concentration of ownership, specifically in dairy processing,” Sanders said. “According to the dairy industry press, one company, the largest milk producer in America, Dean Foods, controls approximately 90 percent of the milk market in Michigan, about 80 percent of the milk market in Massachusetts, 80 to 90 percent in Tennessee, over 80 percent in northern Alabama, over 70 percent in northern New Jersey and in New England about 70 percent.”

In 2001, Suiza Corp. bought Dean Foods, adopted the company’s name, and formed the largest dairy manufacturing corporation in the United States. The company sells milk and other dairy products under 50 “well-known local and regional brands and a wide array of private labels,” according to its web site.

Sanders asked Varney if she would pick up an investigation into the “far-ranging anti-competitive practices” of Dean Foods and Dairy Farmers of America. The 26-month probe, conducted by career investigators at the Department of Justice, was dropped in 2006.

“It is my understanding that in August of 2006 that team recommended action against some of the dairy industry’s biggest firms, including Dean Foods, Dairy Farmers of America and National Dairy Holdings,” Sanders said. “Unfortunately, under the Bush administration it was kicked over to the political people and they decided not to pursue that investigation or take any action. Can you give us assurance that you in fact will continue that investigation and if it leads you to the conclusion that action should be taken that in fact you’re prepared to take action?”

Varney replied, “I can give you every assurance that any investigation I undertake that leads us to believe there is evidence sufficient to prosecute will be prosecuted. There is no doubt that we will prosecute that kind of activity should we find it.”

The Senate Judiciary Committee will accept written testimony from dairy farmers through Sept. 30 at Dairy_Hearing@Judiciary-dem.senate.gov.

Bob Wellington testifies

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