United States: USDA to Begin Strengthening Enforcement of Packers and Stockyards
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The United States Department of Agriculture (“USDA”) announced late last month that it would take action to support enforcement of the Packers and Stockyards Act (“P&S Act”), a century-old law designed to protect “poultry farmers”. , pig and cattle ranchers against unfair, deceptive and anti-competitive practices in meat markets. The proposed revisions involve further changes to the illegal conduct provisions of Title II of the P&S Act as well as a menu of grant and loan programs to address issues along the food supply chain.
As part of the OMB’s “Spring 2021 Unified Agenda of Regulatory and Deregulatory Actions”, which defines the upcoming actions of administrative agencies, the USDA has indicated that its pending action focuses on three actions:
- Propose a new rule that will bring more clarity to strengthen the application of unfair and deceptive practices, undue preferences and unfair prejudices;
- Propose a new rule for the poultry farmer tournament system; and,
- Re-propose a rule to clarify that the parties do not need to demonstrate an infringement of competition to bring an action under the Slaughterhouses and Stockyards Act.
In the press release announcing the plan, Agriculture Secretary Tom Vilsack noted how the pandemic revealed how the concentration can negatively impact independent farmers and ranchers, while exposing consumers to “increased prices. and uncertain production ”.
While the extent of the impact of these future proposals on the poultry, pork, and livestock (“livestock”) industries is not known until the USDA releases the proposed regulations, we anticipate that the livestock industry will suffer a significant setback as it previous proposed revisions. Previous proposals to modernize P&S Act regulations have been received by industry, Congress and federal courts with mixed reactions. The USDA has dropped a list of proposed market fairness rules promulgated under the Obama administration in the face of opposition. The agency announced the publication of a final rule in December 2020 setting out criteria for judging unfair and unreasonable preferences and benefits under the P&S Act. The USDA has not made a policy statement as to whether the infringement must be demonstrated. Several federal courts of appeal have ruled in the past that competitive prejudice must be shown as evidence under these market conduct provisions. The proposed revision aims to clarify that it is not necessary to demonstrate that there is prejudice at the market level, which is incompatible with current case law.
We expect the USDA to prioritize these regulations over the next few months in light of this month’s White House executive order designed to increase competition in several sectors of the U.S. economy, including the United States. agriculture and livestock sector. Members of the industry should monitor these proposed rules to take advantage of the opportunity to comment on the proposed rules, determine any impact on their current operations and ensure that their activities comply with these requirements. This announcement also reminds players in the livestock industry to ensure that their actions in the market comply with the principles of the P&S law.
Co-authored by Temidayo Joseph, summer partner in the office of Husch Blackwell, LLP, Washington, DC.
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