USDA decided to give the controversial interim final rule (IFR) governing the Grain Inspection, Packers and Stockyards Administration (GIPSA) the boot last week. GIPSA delayed the effective date of the rule, which was published last December as the Obama administration was on its way out the door. The IFR is referred to as the Farmer Fair Practices Interim Final Rule, Scope of Sections 202 (a) and (b) of the Packers and Stockyards Act of 1921. That delay for an additional six months ending Oct. 19, 2017 was in response to a comment received from the Farm Bureau requesting an extension. USDA decided to just dump it all together, withdrawing the IFR published in the Federal Register.
Again, the Trump administration is keeping its word on reducing regulations. The controversial rule originated with the 2008 farm bill when some producers were pushing for more leverage against larger packing companies; more so in the poultry industry than other meat industries. This rule has been in the rule-making process for about 10 years and it was good to see the administration just get rid of it.
There were several reasons USDA decided to pull the IFR, which would have led to increased litigation. Without the requirement to show harm to competition, the IFR would have emboldened producers and growers to sue for any perceived slight by a packer or integrator. While fear of litigation would cause packers and integrators to vertically integrate further, increase their volume of captive supplies, and rely even more on those suppliers and growers they currently use, it could result in new suppliers being shut out of markets.
Also, GIPSA was concerned about legal and policy concerns related to promulgation and implementation of the IFR. The agency’s interpretation of sections 202(a)-(b) in the IFR conflict with judicial decisions in several U.S. appellate courts. The withdrawal document concedes that at least two appellate courts almost certainly will not defer to GIPSA’s interpretation of the law embodied in the IFR, which “will inevitably lead to more litigation in the livestock and poultry industries.” Also, the agency concluded that “allowing the IFR to go into effect would create an unworkable legal patchwork” and that protracted litigation serves neither the interests of the livestock and poultry industries nor GIPSA.
The agency also cited Administrative Procedures Act (APA) deficiencies associated with its December decision to promulgate an interim final rule and forego the normal APA notice and comment procedure. To promulgate the IFR, the agency needed to satisfy the APA’s “good cause” exception and explain why that exception was satisfied. In the withdrawal document GIPSA recognizes no “good cause” existed, acknowledging that neither Congress nor a court mandated that GIPSA issue §201.3(a), nor were there any deadlines for its issuance.
Many producers think that implementing the IFR would mark the end of alternative marketing programs and that the rule would have discouraged incentives and premiums for producers to produce to specific specifications, like Certified Angus Beef and other programs. Colin Woodall at NCBA said, “This is a victory for America’s cattle and beef producers, and a victory for American consumers. Agriculture secretary Sonny Perdue deserves a great deal of thanks and credit for this smart decision. The proposed rule would have crippled cattle producers’ ability to market their products through the value-added programs that help make American-produced beef the most delicious and nutritious in the world. This decision is worthy of celebrating this evening with a top-quality steak.”
For other producers this rule was all about fighting against the multinational meat packers and reducing their balance of power. And that it is all about protecting the family farmer from corporate America. Roger Johnson of the National Farmers Union (NFU) said, “With this decision, USDA has given the green light to the few multinational meatpackers that dominate the market to discriminate against family farmers. As the administration has signaled its intent to side with the meat and poultry giants, NFU will peruse congressional action that addresses competition issues and protects family farmers and ranchers.”
After 10 years of bantering these competition rules back and forth, let’s hope it’s over. Government can’t and shouldn’t fix everything. We have groups in agriculture that want more government and those who want less government. I vote for less. — PETE CROW
