GIPSA Rule: Victimized by a Captive Congress and an Acquiescent Administration


by: Thomas F. “Fred” Stokes, OCM President

Well they’ve done it; they’ve successfully ripped the very heart out of the proposed GIPSA Rule!

The current administration gave us high hopes for reform of livestock markets and fair treatment for contract poultry and hog growers by reinvigorating the 90 year old Packers and Stockyards Act (PSA) through the rulemaking process. But the proposed GIPSA Rule has been reduced to relatively insignificant fragments by a congress that is beholden to meat packer interests and an administration which became silent and submissive.

The GIPSA Rule was crushed through the appropriations process, using the same tactics employed to stall Country of Origin Labeling for six years,—- but with a crafty twist. They snuck it into the minibus appropriations bill via the conference process. No vote on defunding the Rule by either the House or Senate; no requirement for any senator or representative to reveal their position; just an up-or-down vote on the must-pass appropriation bill itself.

The 2008 Farm Bill required GIPSA to promulgate rules to address specific aspects of the PSA. Now, through the rider inserted in the appropriation bill by the conference committee, congress has precluded USDA from carrying out its mandate.

USDA does not need congressional approval to make rules; it can and is obliged to promulgate rules as needed to properly administer laws for which it is responsible for
administering. A critically important part of PSA which is addressed in the Proposed GIPSA Rule but not in the farm bill mandate is Section 202, Unlawful practices:

“It shall be unlawful for any packer or swine contractor with respect to livestock, meats, meat food products, or livestock products in unmanufactured form, or for any live poultry dealer with respect to live poultry, to: (a) Engage in or use any unfair, unjustly discriminatory, or deceptive practice or Device; or(b) Make or give any undue or unreasonable 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;”

In several cases tried under this section of PSA, jury verdicts for plaintiffs have been reversed by judges who ruled that in order to claim harm to an individual or class, harm to competition across the industry must first be established. There is nothing in the plain language of PSA that says this and the proposed rule states:

“USDA has consistently held that under sections 202(a) or (b) of the Act, an unfair practice can be proven without proof of predatory intent, competitive injury, or likelihood of competitive injury. The court decisions that require proof of harm or likelihood of harm to competition in order to prove any violation of section 202(a) or (b) of the Act creates an unreasonable standard that may be difficult to meet.”

The Supreme Court has held that courts should give deference to the interpretation of the administering agency of a statute. In a letter to Secretary Vilsack, Senator Tom Harkin expressed his view on the matter:

“A cardinal principle is that the courts are to give deference to the interpretation of laws by the federal agencies that are charged with implementing and administering them. Specifically, for instance, GIPSA is to be accorded deference in its interpretation, spelled out in the proposed rule, that the P&S Act protects individual producers against “unfair, unjustly discriminatory, or deceptive practice[s] or device[s]” without a necessity of showing such conduct has an impact on the broader market.”
A shameful example of the results of this ruling is the Terry v. Tyson Farms, Inc. case. Tom Terry, a contract poultry grower in Tennessee was maliciously and illegally wronged by Tyson. When he filed a court action for redress, the judge acknowledged the harmful acts but declined to hear the case by invoking the “harm to competition” ruling. The General Counsel for OCM along with three other attorneys petitioned the U. S. Supreme Court but the high court declined to hear the appeal.

If the Rule became final and the Chevron Supreme Court decision was honored, packers and integrators would suddenly become open to to accountability for infractions of PSA. It is the threat of removal of this “get out of jail free card” that has caused such frenzied opposition and the ultimate defeat of the Proposed GIPSA Rule.

The Informa Study commissioned by American Meat Institute claimed the GIPSA Rule would cause great harm; 22,800 lost jobs, an annual GDP loss of $1.5 billion and lost tax revenue of $359 million. The “study” states:

“The provision that removes the burden for litigants to show competitive injury in order to seek damages is by far the largest area of concern. Informa finds that nearly 75% of the expected economic damage arising from this proposed rule can be tied directly to this provision.”
Now that AMI and their fellow conspirators have succeeded in killing this part of the Rule, the producer protection provision of PSA is effectively null and void.

The defeat of the GIPSA Rule is a devastating blow for those of us who were so hopeful of livestock market reform. We knew that there were powerful and highly motivated opponents to this reform effort but we had been led to believe that our friends in the congress, especially in the senate, would not let the GIPSA Rule be killed in the appropriations process.

However, when it really counted, these friends were not there. It is hard to believe that this defunding maneuver could have been pulled off by the conference committee without at least the tacit acquiescence of the administration and those in congress who pretended to be on our side.

Most disappointing!

The Rule outcome sadly brings to mind the famous statement by Dr. Martin Luther King Jr.; ”FS

“In the end, it is not the shrill shouts of my enemies that I will remember, but the silence of my friends.