Call for Withdraw of Regulation
The Trump administration gave notice that it will further delay the effective date of a regulation related to the buying and selling of livestock, a move applauded by the National Pork Producers Council, which opposes the Obama-era rule. It also will take public comments on what to do with the regulation.
The so-called Farmer Fair Practices Rules, written by the U.S. Department of Agriculture’s Grain Inspection, Packers and Stockyards Administration (GIPSA), includes two proposed regulations and an interim final rule, the latter of which now is set to become effective Oct. 19.
“We’re extremely pleased that the Trump administration has extended the time it has to review this regulation and the public comments on it, which will show the devastating effects this rule would have on America’s pork producers,” said NPPC President Ken Maschhoff, a pork producer from Carlyle, Ill. “The regulation likely would restrict the buying and selling of livestock, lead to consolidation of the livestock industry – putting farmers out of business – and increase consumer prices for meat.”
A notice in tomorrow’s Federal Register will indicate USDA is delaying the April 22 effective date for the interim final rule by 180 days and setting a 60-day comment period – from April 12 to June 10 – on whether to further delay or withdraw it. Just days into his presidency, President Trump extended for 60 days the public comment deadline on and Feb. 21 effective date of the Farmer Fair Practices Rules.
“The administration recognizes the importance of this issue to livestock farmers,” Maschhoff said, “and it’s following through with its pledge to look at regulations that would negatively affect people and the economy. Now we need to withdraw this bad regulation.”
NPPC is most concerned with the interim final rule, which would broaden 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, the regulation would deem such actions per se violations of federal law even if they didn’t harm competition or cause competitive injury, prerequisites for winning PSA cases.
USDA in 2010 proposed several PSA provisions – collectively known as the GIPSA Rule – that Congress mandated in the 2008 Farm Bill; eliminating the need to prove a competitive injury to win a PSA lawsuit was not one of them. In fact, Congress rejected such a “no competitive injury” provision during debate on the Farm Bill. Additionally, eight federal appeals courts have held that harm to competition must be an element of a PSA case.
“Eliminating the need to prove injury to competition would prompt an explosion in PSA lawsuits by turning every contract dispute into a federal case subject to triple damages,” Maschhoff said. “The inevitable costs associated with that and the legal uncertainty it would create could lead to further vertical integration of our industry and drive packers to own more of their own hogs.
“That would reduce competition, stifle innovation and provide no benefits to anyone other than trial lawyers and activist groups that will use the rule to attack the livestock industry. For those reasons, we’re asking the administration to withdraw the rule.”
An Informa Economics study found that the GIPSA Rule today would cost the U.S. pork industry more than $420 million annually – more than $4 per hog – with most of the costs related to PSA lawsuits brought under the “no competitive injury” provision included in the interim final rule.