In a formal letter sent to the Packers & Stockyards Division of the U.S. Department of Agriculture's Agricultural Marketing Service (AMS), R-CALF USA requested that the agency extend the comment period in its proposed rule regarding undue preferences or advantages for at least 90 additional days beyond the current deadline of March 13, 2020.
In its letter, the group wrote that the proposed rule intending to implement the undue preferences prohibition contained in the Packers & Stockyards Act of 1921 (PSA) requires additional, extensive research before the group can formulate meaningful public comments.
PSA makes it unlawful for a packer to grant any undue or unreasonable preference or advantage to particular cattle sellers or to subject particular cattle sellers to any undue or unreasonable prejudice or disadvantage.
Although PSA was passed nearly a century ago, the agency had never promulgated rules with which to implement this prohibition. In the 2008 farm bill, Congress specifically directed the agency to do so.
R-CALF USA offered three specific reasons why it must conduct extensive research that will take several months before it can begin to offer meaningful comments to the proposal.
First, the group stated that the agency's approach in its proposed rule0making is “highly unusual and raises the question of whether the proposed rule is even responsive to Congress's 2008 directive.” The group stated that rather than establishing standards for determining what constitutes a violation of PSA, the agency instead provides a laundry list of defenses that packers can use anytime they are confronted with an allegation that they violated the act. The group states that this laundry list only establishes what does not constitute a violation and that appears inconsistent with Congress's directive, thus necessitating extensive research to determine whether the agency's unusual rule-making approach is even appropriate.
Second, the group stated that the proposed rule relies on “broad, sweeping generalizations and assumptions that the agency does not support with any evidence.” As an example, the proposed rule makes the generalization that most court cases have required cattle producers to first show that a packer's violation of the undue preference provision has caused harm to the competitiveness of the entire industry. However, R-CALF USA asserts that AMS did not mention any of those court cases and believes that decisions by the eighth circuit courts contradict the agency's generalizations and assumptions. This, the group claims, requires more research to determine the validity of the agency's assumptions that form the basis for the proposed rule.
Finally, R-CALF USA stated that the proposed rule, on its surface, appears to facilitate and promote unlawful collusion among packers because it includes as a defense to any alleged violation the question of whether the prices and terms of sale offered by one packer are similar or identical to the prices and terms offered by competing packers. However, the group pointed out that the very agency that is proposing this rule has a policy to protect from public disclosure the prices and terms that any individual packer provides. The group explained that the AMS confidentiality guidelines associated with the Livestock Mandatory Reporting Act ensure that prices and terms offered by any individual packer are not disclosed to the public.
R-CALF USA stated that extensive research is needed to determine if the proposed rule is even lawful given that it appears to facilitate and promote collusion among packers to share confidential and proprietary pricing and terms of sale information with each other to ensure that the prices and terms they offer are similar, if not identical, to the prices and terms offered by their competitors.
"It is critically important to the U.S. cattle industry that the government establish appropriate standards to properly implement this important prohibition against offering sweetheart deals to select cattle sellers while depriving others of similarly favorable prices or terms," R-CALF USA chief executive officer Bill Bullard said. "We believe this issue explains why our industry has lost 75% of its smaller farmer feeders over the past two decades while the largest of cattle feeding operations continue to expand."