Source: Tom Johnston, MEATINGPLACE, 12/27/18


USDA was not “arbitrary and capricious” in withdrawing an interim final rule that would have made it easier for farmers and ranchers to sue meatpackers on claims of unfair treatment in business contracts, the Eighth Circuit Court of Appeals has ruled.
The appellate judges denied a petition to review brought by the Organization for Competitive Markets, which contends that USDA has violated a congressional mandate given in the 2008 farm bill to publish a regulation outlining criteria around contracting practices by June 2010.

OCM, on behalf of two poultry growers and a cattle rancher, filed the lawsuit late last year after USDA, under the new Trump administration, withdrew an interim final rule — known as the Farmer Fair Practices Rules — implemented at the end of the Obama administration in 2016. That interim final rule would have made it easier for farmers and ranchers to prevail in cases where they claim packers treat them unfairly in contracts because it would have essentially eliminated the need for proof of competitive harm.
Implementation of the Farmer Fair Practices Rules would have represented a change in USDA’s regulatory approach and would have conflicted with the courts’ historic interpretations of the Packers and Stockyards Act (PSA).

In its ruling, the panel of appellate judges wrote, “USDA explained that it was withdrawing the interim final rule and taking no further action on the proposed regulations because the proposed regulatory change of course would generate protracted litigation, adopt vague and ambiguous terms, and might prevent innovation and foster vertical integration that would hinder new market entrants. … These are legitimate regulatory and substantive concerns.”

USDA attorneys told the court last fall that the agency planned to put the issue of the PSA rules on its spring 2019 regulatory agenda, with a possible notice of proposed rulemaking coming sometime after that, and then another rulemaking process to follow that notice.

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