TL;DR: There are laws but the laws are sometimes broken.
So let's say that that the USDA sometimes "ignores" abuse, rather than "condones" it.
In a comment, Fabian said, "A good answer should provide the laws and regulations involve" -- it's not perfectly easy to prove that no such laws exist, but here are two quotes:
From the Humane Society of the United States:
Q. Aren't there laws that protect farm animals from abuse?
From life on a factory farm to death at a slaughter plant, animals raised for meat, eggs, and milk suffer immensely. And, as shocking as it may be, much of the abuse these animals endure is often perfectly legal. There are no federal animal welfare laws regulating the treatment of the billions of "food animals" while they're on the farm. Further, while all 50 states have cruelty statutes, most explicitly exempt common farming practices, no matter how abusive.
From USDA's Animal Welfare web site:
Farm Animals are regulated under the Animal Welfare Act (AWA) only when used in biomedical research, testing, teaching and exhibition. Farm animals used for food and fiber or for food and fiber research are not regulated under the AWA.
There is a Humane Methods of Slaughter Act:
Originally passed in 1958, the law that is enforced today by the USDA Food Safety and Inspection Service (FSIS) was passed as the Humane Slaughter Act of 1978. This Act requires the proper treatment and humane handling of all food animals slaughtered in USDA inspected slaughter plants. It does not apply to chickens or other birds.
Contact the USDA Humane Handling Ombudsman if you have a humane handling related comment or concern or wish to file a complaint.
On at least one occasion, the USDA has "suspended" a slaughterhouse, after an "undercover investigator" from an animal welfare group took some video and sent it to the USDA: USDA suspends slaughterhouse after video appears to show animal cruelty says,
The USDA suspended inspections at the Hanford-based company, effectively halting slaughter operations there.
Company officials have not seen the video, Brian Coelho, president of the Central Valley Meat Co., said Tuesday. He said he was "extremely disturbed" to learn that inspections were suspended.
"Our company seeks to not just meet federal humane handling regulations, but to exceed them," Coelho said in a statement.
USDA inspections are apparently insufficient to detect or prevent all instances of cruelty: I say that because at least one animal welfare group claims to have discovered (and has corresponding video) several instances of 'cruelty' over the years. I presume there are other instance of cruelty, undiscovered, or discovered by other animal welfare groups. Some of these investigations result in criminal charges being laid.
Earlier I said "On at least one occasion" (because I only provided one link to a news article), but this document shows that in 2008 and 2009, there were 80 or 90 "suspensions" per year, issued to federally inspected plants for violations of humane handling and humane slaughter regulations.