(Aug. 6, 1:50 p.m.) An industry analysis of a proposed rule that would require government contractors and subcontractors to participate in the E-Verify system reveals the rule may have a deep effect on agriculture.

The proposed rule was issued June 12 of this year by the Department of Defense, the General Services Administration and the National Aeronautics and Space Administration. If the rule is adopted in current form, the regulation would require each federal prime contractor and potentially many federal subcontractors use the Department of Homeland Security’s E-Verify system to check employees’ work authorization.

The National Council of Agricultural Employers, Washington, D.C., commissioned a white paper analysis of the proposed rule that concludes that millions of employees could fall within the scope of the regulation. Comments on the regulation were due by Aug. 11, but NCAE, the Washington, D.C.-based United Fresh Produce Association and other groups are requesting an extension of at least 30 days because of the complexity of the proposal and the unique problems it presents to agriculture.

“We will be asking for a deadline extension,” said Robert Guenther, senior vice president of public policy for United Fresh. “We think the rule could create a significant burden on produce companies that do business with the federal government.”

Critics point to risks of E-Verify

Industry advocates say the inaccuracies of the E-Verify system — combined with the fact that more than half of the labor in agriculture is estimated to be illegal immigrants — put U.S. produce growers and the food supply at risk if the system was mandated.

In the first year alone, an estimated 168,324 employers will be required to enroll in E-Verify and it will affect about 3.8 million employees, the NCAE analysis indicates.

The dollar value of the affected contracts runs into the hundreds of billions of dollars, the analysis showed.

“In short, it is intended to eliminate as far as possible the employment of unauthorized aliens from the workforce of government contractors. It is also clear that the proposed rule’s likely application may depend on the specific form of the transaction,” the NCAE paper said.

Some exempted from E-Verify

The proposed rule does exempt certain contracts from the E-Verify requirement. The rule exempts “commercially available off-the-shelf” items. The definition of “commercially available off the shelf” item requires that such an item is sold in large quantities in the commercial market place and is offered to the government in the same way it is sold to the market place.

However, the NCAE analysis said the proposed rule regulation was very unclear about agricultural commodities because it also says the definition does not include bulk agricultural cargo.

The NCAE white paper noted that proposed rule anticipates an effective date sometime in fiscal year 2009.

The NCAE analysis examines various scenarios of agricultural firms selling to the federal government.

One scenario is described as when a producer sells fruit directly to the U.S. Department of Agriculture’s Agricultural Marketing Service Commodity Purchase Program.

“Although not free from ambiguity, it is almost certain that the grower would be required to use E-Verify to check the employment authorization of any employee working on the government contract as well as any new hires,” according to the paper concluded. If a growers uses produce from another grower to fulfill a government contract, the white paper said the secondary grower — or subcontractor — would probably not be required to participate in E-Verify.