Livestock Groups Elated with GIPSA Rule Withdrawal

10/18/17 GIPSA Rule Pulled by USDA

Agriculture Secretary Sonny Perdue has decided not to move forward with an interim final rule of the “Farmer Fair Practices Rules,” which was written in 2016 by the U.S. Department of Agriculture’s Grain Inspection, Packers and Stockyards Administration (GIPSA). The regulations are related to the buying and selling of livestock, and broadened the scope of the Packers and Stockyards Act (PSA).

Included in this regulatory rollback are an interim final rule that deals with harm to competition and one proposed rule on conduct considered an unfair practice or results in an undue preference, both of which livestock and poultry producer groups have long opposed. The effective date for implementation of the interim final rule was scheduled for Oct. 19.

“We’re very pleased that the secretary will withdraw these bad regulations, which would have had a devastating impact on America’s pork producers,” says Ken Maschhoff, president of the National Pork Producers Association and a pork producer from Carlyle, Ill. in a NPPC news release. “The regulations would have restricted the buying and selling of livestock, led to consolidation of the livestock industry – putting farmers out of business – and increased consumer prices for meat.”

NPPC explains that USDA proposed several PSA provisions in 2010 – collectively known as the GIPSA Rule – that Congress mandated in the 2008 Farm Bill. Although lawmakers did not include a provision eliminating the need to prove a competitive injury to win a PSA lawsuit, the agency included one in its proposed regulation.

National Cattlemen’s Beef Association Also Pleased
“This is a victory for America’s cattle and beef producers – and it’s a victory for America’s consumers,” says Colin Woodall, the National Cattlemen’s Beef Association's Senior Vice President, Government Affairs in a statement. “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.”

The interim final rule would have broadened the scope of the Packers and Stockyards Act (PSA) of 1921 related to using “unfair, unjustly discriminatory or deceptive practices” and to giving “undue or unreasonable preferences or advantages.” Specifically, it would have made such actions per se violations of federal law even if they didn’t harm competition or cause competitive injury, prerequisites for winning PSA cases. (The proposed rule would have defined the terms in the interim final rule.)

Chairman Roberts Weighs In
U.S. Senator Pat Roberts, R-Kan., Chairman of the Senate Committee on Agriculture, Nutrition, and Forestry, also commended USDA’s rollback of the GIPSA rules.

“Today, rural America has received long-awaited good news,” Chairman Roberts says. “In the heartland, farmers and ranchers applaud the rollback of the ‘GIPSA’ rules.”

In April 2016, Roberts sent a letter to USDA urging the agency to reconsider issuing the rules. Roberts heard concerns about the GIPSA rules from farmers and ranchers at a February Farm Bill field hearing in Manhattan, Kan., and at a Senate Agriculture Committee hearing in May 2016.

“Secretary Perdue’s actions today demonstrate the Trump Administration’s commitment to promoting economic prosperity and reducing regulatory burdens in rural America,” Roberts adds.

Not All Groups Happy
The Organization for Competitive Markets (OCM) was not pleased with Perdue’s decision.

"This withdrawal is a slap in the face to rural America and America's farmers and ranchers,” says Mike Weaver, a poultry grower and president of OCM. “…I am appalled that the administration would choose to support multinational corporate interests over those of our own farmers and ranchers.”

The NPPC and NCBA counter that the proposed rules would have been difficult to decipher and extremely costly to the industry.

An Informa Economics study found that the 2010 GIPSA Rule would have cost the U.S. pork industry more than $420 million annually, or more than $4 per hog, NPPC reports, with most of the costs related to PSA lawsuits brought under the “no competitive injury” provision included in the interim final rule.

The result would have been reduced competition and stifled innovation, Maschhoff says, and would have “provided no benefits to anyone other than trial lawyers and activist groups that no doubt would have used the rule to attack the livestock industry.”