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GIPSA rule delayed again

Proposed changes delayed 180 days to Oct. 19, 2017, and public comments sought again.

In a notice to appear in the Federal Register on April 12, 2017, the Grain Inspection, Packers and Stockyards Administration is delaying USDA's proposed changes to the Packers and Stockyards Act of 1921 to Oct. 19, 2017.

The delay is in response to a request from a national general farm organization.

The National Cattlemen's Beef Association called on USDA to withdraw the interim rule and proposed rules, saying they threatened market incentives, beef quality and would cost the beef industry $954 million.

In a media statement issued April 11, 2017, NCBA said current systems reward producers for producing the higher quality beef consumers demand. The interim final rule regarding the scope of the Packers and Stockyards Act and the proposed rule regarding undue preference and unjust treatment have a direct negative impact on the cattle industry.

"This is another step toward common sense and away from counterproductive government intrusion in the free market,” said NCBA President Craig Uden. “That said, while a delay is welcome, ultimately this rule should be killed and American cattle producers should be free to market our beef without the threat of government-sanctioned frivolous lawsuits.”

Timeline
USDA published the Interim Final Rule on Dec. 20, 2016, and it was due to take effect Feb. 21, 2017.

Related: The rules were designed to protect the rights of farmers

On Jan. 20, 2017, President Trump signed an executive order freezing pending regulations from the Obama administration. The GIPSA rule was delayed until April 22, 2017, and the comment period extended to March 24, 2017.

Related: Fight on GIPSA far from over

The rules, called the Farmer Fair Practices Rules included an interim final rule and two proposed rules.

The Interim Final Rule established that "it is not necessary to demonstrate that an unfair practice harms the entire market in order to prove a violation of the Packers and Stockyards Act."

Related: GIPSA rule implementation delayed, comment period extended

With the April 12 publication, public comment is again sought – from April 12 to June 10 – on whether to further delay or withdraw the Interim Final Rule. The public is to comment on which of four actions they believe USDA should take with regard to the Interim Final Rule:

  • Allow the Interim Final Rule to become effective,
  • Suspend the Interim Final Rule indefinitely,
  • Delay the effective date of the Interim Final Rule further, or
  • Withdraw the Interim Final Rule.

Debate
The extension has generated many comments.

Sen. Pat Roberts, chairman of the Senate Committee on Agriculture, Nutrition and Forestry, welcomed the 180-day extension.

“This extension will allow for the incoming Secretary of Agriculture to fully analyze the effects of the rule and consider the recently submitted public comments," the Kansas Republican said in a media statement. "The Kansas Livestock Association had it right when they said, 'the interim final rules ignores the comments submitted by thousands of cattle producers in opposition to the rule, the decisions of eight separate federal appellate courts and the intent of the language included by Congress in the 2008 Farm Bill.'

“The Obama administration made the imprudent decision to finalize this rule on their way out the door. I hope the Trump Administration’s USDA will finally heed the concerns of farmers and ranchers and the Congress to get rid of this unneeded and unwanted rule.”

Mike Weaver, president of the Organization for Competitive Markets, expressed disappointment in yet another extension.

"USDA needs to stop playing games at the expense of the American family farmer," Weaver said in a media statement. "This will be the third time USDA has asked for comments on this rule. Every time family farmers comment in favor of the rule, USDA delays and opens a new comment period. It's obvious USDA has a deaf ear to America's family farmers. We call on America's consumers to join family farmers in demanding USDA finally enact this rule."

Individual producers were protected from predatory and retaliatory practices of the meatpackers through the P&S Act, until two federal court cases stripped them of their protection in 2004 and 2009, Weaver said. This Interim Final Rule would clarify and reiterate USDA's longstanding interpretation that not all violations of the P&S Act require a showing of harm or likely harm to competition before harm to an individual could be claimed. Processors have used the courts' false interpretation of the P&S Act to avoid responsibility for damages caused to contract farmers when the farmer could not prove harm to the entire sector - a nearly impossible feat for a farmer. This Interim Final Rule would right the wrong of the overreach of these court actions.

The National Pork Producers Council applauded the action.

“The administration recognizes the importance of this issue to livestock farmers,” said NPPC president Ken Maschhoff, a pork producer from Carlyle, Ill., “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.

“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."

An Informa Economics study found the GIPSA rule would cost the U.S. pork industry more than $420 million annually.

The Rural Advancement Foundation International-USA said USDA's action puts special interests first.

“We are shocked to hear that the USDA is delaying the implementation of rules that are meant to provide basic rights and protections to farmers and agricultural communities," said Sally Lee, program director at the Rural Advancement Foundation International-USA. "This decision poses a real threat to independent livestock and poultry businesses in the U.S. – it also ignores the voices of American farmers, who risked retaliation to show their clear and strong support for these rules."

Source: USDA, NPPC, OCM, NCBA, RAFI-USA

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