Stung by continued high inflation numbers, the Biden Administration has taken to blaming America’s meat packing industry for “using their market power to increase prices and underpay farmers, while taking more and more for themselves.” Although an industry-specific allegation does not explain why the broad-based economy is experiencing its first sustained inflationary period in nearly four decades, it is a line the Administration has trumpeted for months. The Administration has now signaled it intends to back up its rhetoric with regulatory action, beginning with the U.S. Department of Agriculture’s (USDA’s) issuance of guidance that attempts to eviscerate regulations the Trump USDA issued.
As required by the 2008 Farm Bill, the Trump USDA in 2020 promulgated a regulation listing the four factors it would use to determine whether a meat processing or packing company had violated the industry’s own specific antitrust statute, the Packers and Stockyards Act of 1921. That regulation sought to tie the antitrust provisions of the Packers and Stockyards Act to more familiar tests, like the rule of reason. The issuance of that regulation came after more than a decade of back-and-forth between the agency, Congress, and stakeholders, including not only lawsuits but also Congressional action to prohibit the USDA from implementing the Obama Administration’s proposed version of the regulation.
Reprising his role as Agriculture Secretary, Thomas Vilsack has wasted no time moving—without the notice and opportunity for public comment required by the Administrative Procedure Act—to gut the 2020 Trump regulation simply by issuing “Frequently Asked Questions” purporting to “interpret” the 2020 regulation. These FAQs, however, make it clear that the Biden/Vilsack USDA will bring its standard for enforcement action as close as possible to the Obama regulation. USDA has also promised to engage in APA-prescribed rulemaking to implement the Biden Administration’s preferred interpretation. Should it do so before taking any enforcement action under the Packers and Stockyards Act, its FAQs will amount to little more than the bureaucracy giving the meat packing industry advance notice of what it can expect in the forthcoming proposed regulation. However, should the Biden USDA implement the increasingly hostile rhetoric of the White House before engaging in notice-and-comment rulemaking, any target of that action would have strong legal arguments that the agency’s actions do not match the current text of the regulations now in effect. And this would be before federal courts had an opportunity to review the substance of any of the Biden Administration’s proposed regulatory changes.
When upholding the Trump Administration’s withdrawal of the Obama USDA’s meatpacking rules in Organization for Competitive Markets v. USDA, the Eighth Circuit noted that “at least six circuits” had already held that the Obama/Biden Administrations’ proposed tougher standards violate the plain text of the Packers and Stockyards Act. Given that, it may not matter whether the Biden Administration revives its interpretation of the Act via guidance or notice-and-comment rulemaking. It would seem to be fodder for a quick injunction in any one of six federal circuits. You should not have to tell the Agriculture Department that looking for an inflation scapegoat is a fool’s errand.
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