NCBA: USDA moves ahead with flawed GIPSA rules
October 14, 2016
In a letter to the National Cattlemen's Beef Association, USDA acknowledged that the agency would continue the rulemaking process on the 2010 Grain Inspection, Packers and Stockyards Act proposed rules. The proposed rulemaking was initially undertaken in 2010 and quickly defunded by Congress which recognized them as a flawed concept that limits producers' marketing options while adding layers of bureaucracy and opening the door to litigation. NCBA President Tracy Brunner said these provisions were troubling in 2010 and remain a major concern six years later.
"The GIPSA rules, as they pertain to cattle producers, are extremely troubling to our industry at a time when we are already grappling with volatile futures markets and a fragile cash market," said Brunner. "Rather than working to help ensure producers have accurate price information in a productive way, like ensuring Mandatory Price Reporting is a critical government function, unaffected by future government shutdowns; USDA is expending time and resources to push forward outdated rules to regulate an industry that never requested their assistance. These rules were flatly rejected by cattle producers six years ago and a strong bi-partisan majority in Congress expressed their continual disapproval through a half-decade of defunding."
USDA has announced the GIPSA rules include an interim final rule on competitive injury and two proposed rules to address undue preference and the poultry grower ranking system. The agency has said they will provide additional opportunity for public comment on all the rules and will announce if any amendments will be made.
"NCBA and our members have been engaged with USDA, even while the implementation of these rules was defunded," said Brunner. "Unfortunately, once again, this Administration has disregarded producer input and moved forward with regulations that would cause irreparable harm. USDA's opportunity for future comment is a hollow offer when they should have engaged with the industry before moving forward."
While USDA notes they will exclude marketing arrangements from these rules, these provisions are outweighed by the competitive injury provisions of the GIPSA rule that do not require a showing of injury in order to claim a violation of the Packers and Stockyards Act.
"We know that regulation and legislation always come with unintended consequences," said Brunner. "We don't see any changes that could be made to the competitive injury and undue preference provisions that wouldn't diminish marketing opportunities for producers. The fact is that value-added programs have supported higher prices and premiums for producers even when markets are weak. The GIPSA rules would jeopardize the future of these programs and add litigation costs. Absent a required showing of economic harm to claim preference, these rules disregard a central tenant of our legal system and set out a regulatory framework for harassment based solely on the subjective appearance of preference."
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In 2010, NCBA submitted comments on the GIPSA rules citing concerns. These concerns remain as relevant today as they were six years ago.
"These rules are not about fairness, and to call them 'Farmer Fair Practices Rules' is nothing but political spin to disguise the real intent," said Brunner. "These rules are another government solution in search of a problem. They will limit producer marketing options, compel buyers to offer lower bids across the board to avoid the appearance of preference and create an environment ripe for baseless legal challenge. We have always said that the GIPSA rules set out a trial lawyer's bonanza and that is as true today as it was in 2010."
NCBA calls on USDA to immediately withdraw the GIPSA rules and work with the industry to address the Administration's concerns with livestock marketing.