What's the Background?

Congress in the 2008 Farm Bill directed USDA to issue rules under the Packers and Stockyards Act of 1921 related to livestock and poultry production and marketing to address some perceived problems. But the agency in mid-2010 proposed regulations – collectively known as the GIPSA Rule – that went well beyond the mandates lawmakers incorporated in the Farm Bill. Rules to determine “unfair, unjustly discriminatory or deceptive practices” and “undue or unreasonable preference or advantage” now are pending with the White House Office of Information and Regulatory Affairs, the last step before a regulation becomes final. While the new rules have yet to be made public, the 2010 proposed GIPSA Rule would have set up a system where every producer would need to be offered the same contract terms.

Why is it important?

The 2016 GIPSA rule broadens the scope of the Packers and Stockyards Act (PSA) of 1921 related to the use of “unfair, unjustly discriminatory or deceptive practices” and “undue or unreasonable preferences or advantages.” Specifically, the regulation would deem such actions per se violations (meaning certain actions would be inherently illegal) of federal law even if they didn’t harm competition or cause competitive injury, prerequisites for winning PSA cases. (Such actions currently are state court matters.) The rule would be a bonanza for trial lawyers. According to an update of a November 2010 study on the rule from Informa Economics, the regulation today would cost the pork industry more than $420 million annually, with the majority of the costs related to PSA lawsuits brought under a “no competitive injury” provision.

What is NPPC's position?

NPPC opposes rules recently issued by the U.S. Department of Agriculture’s Grain Inspection, Packers and Stockyards Administration (GIPSA), which are similar to one proposed in 2010, because of concerns they will restrict producers’ ability to sell and packers’ ability to buy livestock and lead to further consolidation of the livestock industry. NPPC will ask Congress to use its authority under the Congressional Review Act to rescind the regulation. It also will urge lawmakers to approve legislation or include language in the next Farm Bill that stops USDA from issuing similar regulations in the future.