USDA to Reopen Obama-Era GIPSA Rules in 2019

USDA intends to reopen the rulemaking process known as “Farmer Fair Practices Rules.” That announcement was made by a Department of Justice attorney arguing on behalf of USDA in court last week.

During oral arguments in a lawsuit filed by the Organization for Competitive Markets, attorney Weili Shaw said USDA intends to put on its spring 2019 regulatory agenda the rulemaking process for Farmer Fair Practices, formerly known as the Grain Inspection, Packers and Stockyards Administration (GIPSA).

Last year Agriculture Secretary Sonny Perdue announced he would not move forward with an interim final rule of “Farmer Fair Practices Rules,” which was drafted in 2016 under the Obama administration that would have lowered the bar for producers of poultry and other livestock to sue the meatpacking or processing companies they contract with. Purdue’s decision was cheered by livestock groups such as the National Cattlemen’s Beef Association and the National Pork Producers Council.

However, the decision to pull the plug on the Farmer Fair Practices rules were also unpopular with some, and led to the OCM lawsuit, filed last year on behalf of two poultry growers and a cattle rancher. OCM alleges that in withdrawing the final rule, USDA violated Congress’ mandate in the 2008 farm bill, which was to publish a regulation that laid out criteria around contracting practices by June 2010. OCM believes that without a reasonable explanation for doing so, the agency’s actions are “arbitrary and capricious.”

Last year U.S. Senators John Tester, (D-MT) and Chuck Grassley (R-IA), “vehemently” disagreed with USDA's decision on GIPSA. In a bipartisan letter to Secretary Perdue, Tester and Grassley slammed the agency's decision to withdraw two rules related to the Packers and Stockyards Act, commonly referred to as the "GIPSA rules."

"The industry has consolidated for decades into its current structure that enables a handful of companies to have extraordinary market power," Tester and Grassley wrote. "Recognizing that fact, Congress intentionally instructed the Secretary of Agriculture to promulgate new rules in the 2008 Farm Bill to ensure a better functioning marketplace for farmers and ranchers in the livestock and poultry industry."

The reopening of GIPSA rules leaves many industry groups uneasy as it is unclear what the scope of the rulemaking will be. USDA could start from scratch in developing new rules, or the agency could seek to finalize previous proposals.

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