USDA Withdraws Rule Requiring Contractors to Vouch for Labor Law Compliance

The U.S. Department of Agriculture has withdrawn a controversial rule that would have required contactors to certify that they and their subcontractors and suppliers are in compliance with all applicable labor laws. The contracting clause, reminiscent of the Clinton Administration “blacklisting” regulation, was issued in December 2011 as both a direct final rule and a notice of proposed rulemaking. Bypassing the normal notice and comment period, the direct final rule would have taken effect on February 29 of this year. The Department simultaneously issued the proposed rule that allowed for a normal notice and comment process.

The rule would have added a section entitled “Labor Law Violations” to the Agriculture Acquisition Regulation (AGAR) providing the language that must be included in all UDSA solicitations and contracts for more than $150,000. This clause would have required contractors to attest that the contractor “is in compliance with all applicable labor laws and that, to the best of its knowledge, its subcontractors of any tier, and suppliers, are also in compliance with all applicable labor laws.” The clause would have required the contactor to promptly report “to the contracting officer when formal allegations or formal findings of noncompliance of labor laws are determined.” The clause also stated that the USDA considers certification under this clause to be a certification for purposes of the False Claims Act.

Facing opposition on both substantive and procedural grounds, the Department has withdrawn both the direct final rule (pdf) and the proposed rule. (pdf)

When the USDA initially issued the rule, it announced that unless it received negative feedback, the rule would take effect as scheduled. If it received adverse comments, however, the agency stated that it would withdraw the direct final rule and address those comments in a subsequent rulemaking.

Photo credit:  borisyankov

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.