Comments on USDA’s latest attempt to promote fair and competitive livestock and poultry markets show widely divergent views on the proposal’s legality and offers a preview of the litigation to come if the rule is published in final form.
USDA has not said definitively when it might issue a final rule but its latest regulatory agenda estimates it will be December, which would be a quick turnaround for such a consequential proposal.
At issue is whether USDA can find violations of the Packers and Stockyards Act without determining that there has been harm to market competition.
Groups representing the meat and poultry industries uniformly say no.
The National Chicken Council said because the proposed rule “broadens USDA’s authority to all enforcement against conduct without a showing of injury to competition, it prohibits conduct not covered by the PSA and constitutes a ‘major question.’ AMS [Agricultural Marketing Service] has overstepped its statutory authority in issuing this proposed rule.”
The Supreme Court’s most prominent recent use of the major questions doctrine came in 2022 when it found that the agency’s Clean Power Plan went too far in prescribing how power plants should reduce greenhouse gases.
The Meat Institute (formerly the North American Meat Institute) says flatly in its comments that if the rule is finalized as proposed, it “will violate the Constitution and the Administrative Procedure Act because of its breadth and vagueness. The Due Process Clause requires laws to provide adequate notice of what they prohibit,” but “many of the proposed standards are so vague as to be unworkable and, as the Supreme Court has said, a ‘vague law is no law at all.’ ”
In their comments, industry groups relied in large part on a series of federal appeals court decisions.
“As it has done in previous rulemakings, and in litigation before various courts of appeal, the agency stubbornly refuses to accept the longstanding precedent that to prevail in a PSA section 202(a) or (b) case a plaintiff must show injury, or likelihood of injury, to competition,” the Meat Institute said, referring to sections of the law addressing what is unfair or deceptive practices.
The Kansas Livestock Association noted that USDA has tried to define the standards before.
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“USDA attempted to roll back the standard in 2010 and 2016, but neither attempt was successful,” KLA said. “Additionally, the requirement for persons alleging violations of the P&S Act to demonstrate harm, or likelihood of harm, to competition has been affirmed by eight federal courts of appeals, with no dissenting circuit court opinions, and the U.S. Supreme Court routinely has denied review of the issue.”
And the Meat Institute added that “in several of the appellate cases holding that competitive injury is a necessary element of a … violation, the agency participated in some capacity, either as a party or an amicus. Considering this record of litigation futility, AMS is not free to ignore the prevailing judicial authority or seek to undo it through the rulemaking process.”
Some groups also said litigation would surge as a result of the rule.
The removal of the harm to competition requirement would open the floodgates to [Packers and Stockyards Act] litigation in federal courts around contract and commercial disputes, which was not Congress’s intent in enacting the PSA,” the National Pork Producers Council said.
In its proposal, AMS took a different view of the appellate court decisions.
“Even some decisions that have required competitive injury define it more broadly than what might be required to establish antitrust injury,” AMS said,
“Courts that apply a standard with a competitive-injury component … are far from unanimous in their interpretation of the P&S Act's prohibitions, generally, and of competitive injury, specifically,” AMS said. “The Tenth Circuit has required competitive injury for unfairness but not deception claims, while the Fifth and Sixth Circuit appear to require ‘competitive injury’ even for deception claims.”
Other courts, the agency said, “have either explicitly rejected a competitive injury requirement or have found violations without addressing the impact on competition.”
These differences have made enforcement difficult and “created a legal patchwork in which different rules apply depending on the presiding circuit,” AMS said. “The lack of consistent legal standards has adversely affected the department's ability to maintain fair and competitive livestock and poultry markets and ensure producers can obtain the full value of their products and services.”
“For over a decade, USDA has received repeated calls from the public to address these court decisions which frustrate the purposes of the [P&S] Act, although USDA also notes that some industry groups have generally opposed changes to the existing regulatory landscape,” AMS said.
Both USDA and groups supporting the proposal went back to the law itself and its legislative history.
A coalition including Food & Water Watch and the Open Markets Institute filed a 23-page comment that cited the 1921 House report that accompanied the P&S Act which said that the law “give[s] the Secretary of Agriculture complete inquisitorial, visitorial, supervisory, and regulatory power over the packers, stockyards and all activities connected therewith,” including the power to both “prevent” and “redress” unfair practices.
Those groups also said AMS should “make it crystal clear that any requirement to show broader market harms has no place in the individual harm analysis.”
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