US Chamber of Commerce Urged USDA to Abandon Rulemaking

Once again, the U.S. Department of Agriculture (USDA) is attempting to micromanage markets in ways that would reduce competition, harm consumers, and exceed its statutory authority.  In its latest proposal, a rule on Fair and Competitive Livestock and Poultry Markets, USDA would redefine the Packers and Stockyards Act to protect competitors, rather than competition, and afford itself broad discretion to pick winners and losers in the marketplace.

In our comments, the U.S. Chamber of Commerce urged USDA to abandon the rulemaking due to critical flaws:

1.      Flawed Legal Premise: The rule disregards precedent, including eight federal circuit court decisions, by defining unfair practices without requiring proof of harm to competition. Although USDA attempts to distinguish this authority via a selective, tortured, and misleading analysis, USDA cannot expand its authority in a way that disregards the statute and court decisions.

Even worse, USDA relies on a flawed, self-aggrandizing legal analysis from the Federal Trade Commission. The FTC’s history and numerous court decisions emphasize that agencies must use their statutory authority consistent with the statutory design, congressional intent, and judicial decisions.

2.      Flawed Market Assumptions: The rule ignores recent data and rests on incorrect assumptions about market concentration. Numerous studies, including a recent study from Obama-era officials, show that competition remains robust and that the economy is not overconcentrated.

3.      Incomplete Regulatory Impact Analysis: USDA failed to disclose its methodology, account for litigation costs, or even attempt to estimate its chilling impact. USDA did not employ an independent economist or survey the private sector about the rule’s costs. The public has no idea how many “subject matter experts” were consulted, what they were asked, whether their responses were anonymous, or whether these supposed experts had any practical experience working in the private sector, analyzing markets, or estimating the costs that businesses incur on a daily basis.  USDA’s regulatory impact analysis boils down to “trust us.”  This is woefully insufficient.

4.      Harm to Competition: If adopted, the rule would harm competition by creating legal and regulatory uncertainty, increasing litigation, and threatening the use of alternative marketing agreements, which have historically benefited producers, consumers, and packers.  Ultimately, the rule would raise food prices for consumers.

To help with food prices, USDA should withdraw the proposal and embrace policies that expand domestic energy production, reduce barriers to entry, lower taxes, and open new markets for American farmers and companies.

About the authors

Sean Heather

Sean Heather is Senior Vice President for International Regulatory Affairs and Antitrust.

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