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Congress clashes with USDA over proposed GIPSA rules

News
Oct 29, 2010
by WLJ

Congress clashes with USDA over proposed GIPSA rules

The fight over the new regulations proposed by USDA’s Grain Inspection Packers and Stockyards Administration (GIPSA) has been heating up over the past several weeks. Several members of Congress are aligning themselves to derail the proposed regulations that are widely opposed by many cattle producers, packers and retailers. The arguments against regulation are varied, but primary concerns surround the possibility that packers, faced with potential legal or punitive government action, will limit the use of premium pricing or the use of alternative marketing arrangements.

Earlier last month, members of the House and Senate asked USDA Secretary Tom Vilsack to order a comprehensive economic analysis of the proposed competition regulations in an effort to assess the financial impacts the regulation might have on the industry. The bipartisan letter, signed by 115 members of the House, including 68 Republicans and 47 Democrats, pointed out that the proposed rule "is sweeping in its scope and would have major consequences in the marketing of livestock and poultry for producers and processors of all sizes. In order for Congress and the public to evaluate this rule and its implications with full transparency, a thorough economic analysis is necessary."

The livestock industry and members of Congress are concerned that the regulations, as they are currently written, will allow for lawsuits on subjects that have long ago been decided, opening the door for expensive and damaging court fights where the rule would ultimately be defined by judges and juries, neither of which understand the intricacies of livestock marketing. There will be other problems, which were also identified by the House letter.

"The vagueness in the proposed rule will lead to destruction of a multitude of value-added marketing programs. It will eliminate the incentives progressive producers pursue in investing and developing efficient high quality protein demanded by consumers. It has the potential of setting the industry back 30-40 years. It will destroy jobs and drive our food supply to other countries," House members wrote.

However, despite the fact that the House holds considerable influence over USDA and its operations, Vilsack brushed off the request, saying that those concerns were addressed by the proposed regulations when they were published in the Federal Register

"You requested a comprehensive economic study of the proposed rule. Beyond the cost-benefit analysis we have conducted for the proposed rule, we look forward to reviewing the public comments to inform the Department if all factors have been properly considered, if or how changes should be incorporated, and to aid rigorous cost-benefit and related analyses pursuant to the rulemaking process," Vilsack responded. "There are two requirements that outline the process for cost-benefit analyses in rulemaking. Under Executive Order 12866, the issuing agency provides an assessment of the potential costs and benefits of the regulatory action. Under the Regulatory Flexibility Act, agencies consider the impacts of their regulatory proposals on small entities, analyze effective alternatives that minimize small-entity impacts, and make their analyses available for public comment. GIPSA conducted both of these analyses, available on pages 35345 to 35349 of the Federal Register notice, or on GIPSA’s website."

However, the impact studies suggested by Vilsack show little in the way of actual costs to the industry or impact of the regulations on how livestock are marketed. As a result, Vilsack’s response didn’t resolve the fears of the industry or the demands of Congress for an economic review. In a scathing letter last week, Rep. Ike Skelton, D-MO, responded to Vilsack’s denial and demanded, again, an economic review of the regulations above and beyond what was published in the Federal Register.

"On at least nine occasions on pages 35345 to 35349 of the Federal Register, GIPSA sets forth a nominal cost-benefit analysis then proceeds to invite farmers and other stakeholders to provide ‘specific comments on additional categories of cost and benefit items as well as their magnitudes.’ In essence, the Department has asked producers to do its homework," Skelton wrote. "It is not fair to ask American farmers to run complex and potentially very costly calculations about GIPSA’s proposed rule when the Department’s economists and lawyers should have done that before soliciting public comment in the Federal Register. That is why I again ask the Department to examine GIPSA’s proposal and provide American farmers and their elected representatives in Congress with more precise economic data about it."

Whether or not Vilsack responds with additional information remains to be seen. As of last week, there had been no formal reply from USDA officials to the added requests from Congress. The entire regulation may be subject to the shifting winds of politics. With the mid-term elections Nov. 2, it seems possible that a change in the make-up of Congress could result in USDA and the Obama administration shelving the controversial plan in favor of less radical reform efforts that would be more palatable to members of Congress and the public. — John Robinson, WLJ Editor

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