GIPSA rule May 11 2017

U.S. Department of Agriculture’s (USDA) Grain Inspection, Packers and Stockyards Administration (GIPSA) Delays Effective Date of Interim Final Rule

by Suzy Noecker, Representing the ACCW Legislative Committee

On April 11, GIPSA announced the delay of the effective date of the Scope of Sections 202(a) and (b) of the Packers and Stockyards Act Interim Final Rule (IFR) until October 19, 2017. In a separate action on the same day, the USDA announced it is asking the public to comment on four possible actions USDA should take in regards to disposition of the final rule. The notice of the delay of the effective date of the IFR and the opening of public comment on disposition of the final rule were published in the Federal Register on April 12, 2017.

The public is being asked to comment on which of four actions they believe would be the best for the USDA to take with regard to the disposition of the IFR. The four choices are 1) allow the IFR to become effective; 2) suspend the IFR indefinitely; 3) delay the effective date of the IFR further, or 4) withdraw the IFR. The 60-day comment period on the disposition of the IFR ends on June 12, 2017. The address for submitting comments is: M. Irene Omade, GIPSA, United States Department of Agriculture, 1400 Independence Avenue SW, Room 2542A-S, Washington, D.C. 20250-3613.

Included in the Federal Register notice addressing the delay of the effective date of the IFR, there is the following:

“As published, this interim final rule states the USDA’s long held interpretation that not all violations of the P&S Act (Packers and Stockyards Act) require a showing of harm or likely harm to competition.”

This statement is the core of the problem with the IFR according to statements in the “Comments of the National Pork Producers Council and National Cattleman’s Beef Association on Interim Final Rule on Scope of Sections 202(a) and (b) of the Packers and Stockyards Act, 81 Fed Reg. 92566-92594 (Dec. 20, 2016)”.

Submitted by Craig Uden, President of National Cattlemen’s Beef Association and Ken Maschhoff, president of the National Pork Producers Council, the comments state:

“The Interim Final Rule attempts to rewrite certain provisions of the Packers and Stockyards Act (PSA) to permit plaintiffs to pursue “unfair” or “discriminatory” acts without proving such acts cause injury to competition. GIPSA’s interpretation runs counter to the decisions of eight federal courts of appeals holding that Section 202 unambiguously requires proof of injury to competition. (Page 1)

Congress enacted the Packers and Stockyards Act in 1921 to regulate the business of meat packers in particular, Secton 202 of the PSA makes it unlawful for any packer or swine contractor to : “(a) [e]ngage in or use any unfair, unjustly, discriminatory, or deceptive practice or device; or (b) [m]ake or give any undue or reasonable preference or advantage to any particular person or locality in any respect, or subject any particular person or locality to any undue or unreasonable prejudice or disadvantage in any respect.” (Page 4)

To address anticompetitive practice, Congress borrowed from the Sherman Act and other antitrust statutes in crafting the PSA. In building off of and borrowing language from the antitrust statutes, Congress incorporated into the PSA the meaning that the language had at the time. Therefore, the words ‘unfair,’ ‘undue,’ and ‘unreasonable’ in section 202 clearly encompass a requirement of finding harm to competition.” (Page 4)

The associations feel the rule is too broad ‘adopting an industry wide solution for problems that may exist only as a result of alleged practices affecting other unrelated segments of the meat sector.’ They feel the rule should be repealed because it is ‘arbitrary and capricious’. ‘GIPSA is acting without record evidence establishing an actual problem in the pork or beef industries in need of a regulatory solution.” (Page 2)

These comments are worth the read. They provide a great overview of the Packers and Stockyards Act and the legal and congressional decisions upholding provisions in Section 202 (a) and (b) that require proof of injury to competition to establish a violation of PSA.

Links to Information

Federal Register Documents: https://www.federalregister.gov/documents/2017/04/12

For the rule, notifications and information: https://www.gipsa.usda.gov/psp/farmerfairpractices.aspx

Ag Associations Comments document: http://nppc.org/nppc-asks-usda-to-abandon-gipsa-rules/

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