USDA Puts Fox in Charge of Guarding the Hen House

Via former Congressman Bob Barr and sitting Congressman Collin Peterson, I’ve learned about some troubling new regulations on the livestock industry proposed by the USDA’s Grain Inspection, Packers & Stockyards Administration (GIPSA). GIPSA may not be as sexy a regulator as PCAOB or NHTSA, but this is one more example of obscure regulatory agencies run amok. What makes this particular proposal especially problematic is that the GIPSA Administrator, a former trial lawyer named J. Dudley Butler who made his bones suing poultry producers, seems to have intentionally introduced a level of vagueness into the rule that, in his own words, makes it a “plaintiff lawyer’s dream.”

Under the terms of the 2008 Farm Bill, Congress instructed GIPSA to promulgate new rules governing the contractual arrangements between cattle and poultry producers on the one hand and stockyards and slaughterhouses on the other, in order to “help ensure fair trade and competition in the livestock and poultry industries.”  However, according to a letter from House Agriculture Committee Chairman Peterson to Ag Secretary Tom Vilsack, which was signed by 114 other members of Congress (for a total of 68 Republicans and 47 Democrats), the proposal strays “far beyond Congress’ intent in the Farm Bill” and “would precipitate major changes in livestock and poultry marketing”.  In addition,  the “analysis contained in the proposed rule fails to demonstrate the need for the rule”.

Like many federal regulations, the proposed rule would also have little impact on the three largest U.S. meat packers, but could wreak havoc on smaller, regional packers “who have carved their niches out by differentiating themselves by creating supply chains that allow them to hit differentiated, value-added markets more consistently.”  It’s also based on a premise that has been tried before at the state level, but later abandoned as a total failure.  According to Troy Marshall, a contributing editor for Beef magazine:

We all remember what happened when the state of Missouri enacted a similar rule – nobody wanted to buy cattle in the state of Missouri, and they quickly acted to rescind the law. Admittedly, if these GIPSA rules pass on the national level, the packing industry won’t stop buying cattle, but the results are predictable and almost the opposite of what proponents are arguing will happen.

Fortunately, some aggressive oversight by the House Ag Committee has caused GIPSA to postpone implementation of the rule and extend the comment period.  But let’s not forget that a good part of the problem can be attributed to Congress’s willingness to enact vague legislation that leaves too much discretion in the hands of largely unaccountable bureaucrats.  Of course, it was wildly inappropriate for the Obama Administration to put a fox in charge of guarding the hen house by installing a tort-happy plaintiff’s lawyer like Dudley Butler in a position to re-write rules that could make it way too easy to successfully sue meat and poultry producers.