Lawsuit Attempts To Force USDA To Reinstate Livestock Fairness Rule

Dec 14, 2017

The U.S. Department of Agriculture faces a lawsuit that argues the federal agency must bring back a proposed rule that defined abusive practices by meatpacking companies.

Farmers from Alabama and Nebraska and the Organization for Competitive Markets, a nonprofit that works on competition issues in agriculture, filed the suit Thursday in the 8th U.S. Circuit Court of Appeals.

The “fair practice” rule addressed longstanding complaints from many beef, pork and poultry farmers who say meatpackers wield too much power over their businesses. Among other things, it said meat companies cannot break production contracts without notice, retroactively require costly investments in feeding facilities or block farmers from marketing their cattle or hogs.

The USDA offered no comment on the case, but when the rule was withdrawn in October Agriculture Secretary Sonny Perdue said the proposed changes would have caused too many lawsuits and that the market should determine competitive forces. The latter is an opinion shared by some groups representing livestock producers like the National Cattlemen’s Beef Association.

“My fear was it would just have been a windfall for litigators and lawyers who wanted to take these court cases and would’ve been very disruptive to the markets and disruptive to the fair competition among producers there,” Perdue said in November in Omaha, Nebraska.

The suit claims the USDA must go ahead with the rule because it was requested by Congress in the 2008 farm bill. It also says the rule would have prevented frivolous lawsuits.

“The fact is it only will allow the farmer the right to have their grievance filed in court,” OCM executive director Joe Maxwell said. He added that current court precedent sets a high bar to prove meatpackers are abusing their power.

“It’s fruitless to bring a challenge because a farmer does not have the capacity to prove the actions that company did against their farm affected the entire marketplace of beef in the country, or pork,” he said.

The livestock competition rule was first proposed in 2010, but it was blocked for years by budget riders that kept the USDA from finalizing any changes. That ban was lifted at the end of the Obama administration and a final rule was issued — only to be withdrawn under the Trump administration.

Perdue is expected to move forward with more changes to the department that oversees competition in the grain and livestock industries. Under a planned reorganization of the USDA, the Grain Inspection, Packers and Stockyards Administration (GIPSA) would be eliminated as a standalone agency and its work would be taken on by the USDA’s Agricultural Marketing Service.