At the end of 2016, the U.S. Department of Agriculture’s (USDA) Grain Inspection, Packers and Stockyards Administration (GIPSA) proposed a rule to “clarify the conduct or action . . . that GIPSA considers unfair, unjustly discriminatory, or deceptive and a violation of section 202(a) of the [Packers and Stockyards] Act” (the P&S Act, codified at 7 U.S.C. § 192(a)). 81 Fed. Reg. 92,703 (Dec. 20, 2016).  The proposed rule also included criteria to be used to determine “whether conduct or action by packers, swine contractors, or live poultry dealers constitutes an undue or unreasonable preference or advantage in violation of section 202(b) of the P&S Act” (codified at 7 U.S.C. § 192(b)).  Id. Finally, the proposed rule also included various examples of conduct that, notably, did not require likelihood of harm to competition to establish a violation of sections 202(a) or (b) of the P&S Act. See id. at 92,722-723.

While the proposed rule drew support from agricultural producers as providing greater protection against potential inequities in bargaining with packers, swine contractors, and live poultry dealers (e.g., an imbalance in bargaining power), others noted that “the breadth of the proposed regulation would suppress innovative contracting because regulated entities would fear the increased risk of litigation presented by ambiguous terms in the proposed rule” as “producers and growers might be emboldened to sue for any perceived slight.”  82 Fed. Reg. 48,603 (Oct. 18, 2017) (emphasis added).

In abandoning the proposed rulemaking, GIPSA explained that “the proposed rule could have the unintended consequence of preventing future market innovations that might better accommodate rapidly evolving social and industry norms,” id. at 48,604, which is at odds with the federal regulatory policy pronounced in an Obama era executive order directing agencies to “identify and use the best, most innovative, and least burdensome tools for achieving regulatory ends.” Executive Order 13,563 § 1(a) (Jan. 18, 2011).

Finally, it is worth noting that GIPSA also withdrew the interim final rule promulgated contemporaneously with the aforementioned proposed rule. The interim final rule (IFR) was intended to amend the P&S Act implementing regulations “to state that a finding of harm or likely harm to competition was not needed to find a violation of sections 202(a) or (b)” of the P&S Act.  82 Fed. Reg. 48,594 (Oct. 18, 2017) (emphasis added).  GIPSA explained that the IFR was withdrawn “because of serious legal and policy concerns related to its promulgation and implementation” – primarily: the fact that GIPSA’s interpretation “embodied in the IFR is inconsistent with court decisions in several U.S. Courts of Appeals, and those circuits are unlikely to give GIPSA’s proposed interpretation deference.” Id. at 48,596.

Thus, the status quo remains and GIPSA will continue to evaluate whether certain practices or conduct are unfair or deceptive on a case-by-case basis.

On June 22, 2017 and September 15, 2017, we blogged about “ag-gag” laws – laws intended to prevent undercover access to agricultural production facilities for the purpose of finding and disclosing unethical behavior. These laws have met with varying fates in the federal courts.

In 2012, the Iowa legislature passed an ag-gag law, making it a misdemeanor to obtain access to an agricultural production facility by false pretenses or to obtain employment at such a facility by such means.

On October 10, 2017, the Animal Legal Defense Fund and several other pro bono organizations filed suit for declaratory and injunctive relief against Iowa’s ag-gag law. The suit alleges that the statute violates the First Amendment, both facially and as applied, in that it is a content-based restriction on efforts to obtain information about mistreatment of animals.  The suit also alleges that the statute was motivated by animus against the plaintiffs and hence violates due process and equal protection.

Fall is just about here. Autumn leaves, apple cider and, of course, football! Also, being traditionally the start of the new school year, fall is a time when start-ups dig in, push hard and perhaps even undertake a little self-reflection and planning, rushing to get things done before the holidays. I recently commented on some key issues that start-ups who were attending Techweek last week here in Kansas City, where I live and work, should consider. I thought these tips, which you can read at this link, might be helpful for my AgTech start-up friends as well. Something to read and reflect on while sipping that hot cider on a cool autumn night…Let us know if we can do anything to help with your business planning. Happy fall!

On Tuesday, September 12, The Board for International Food and Agricultural Development (BIFAD) will hold a public meeting covering the U.S Government’s Global Food Security Research Strategy: From Upstream Research to Development Impact. Jim Ash, leader of Husch Blackwell’s Food & Agribusiness group, is a member of BIFAD and will be moderating an afternoon panel on the topic of Leveraging Private Sector Innovation. Tomorrow’s meeting is open to anyone who would like to listen and participate. The agenda can be accessed here and will be livestreamed here. A list of topics that will be covered includes:

  • Update on Global Food Security Act
  • U.S. Government’s Global Food Security Research Strategy Overview
  • Cutting Edge Science for Development
  • Practical Application of Research Results
  • Applying Research to Emerging Threats
  • Federal and State Investments in Agricultural Research
  • Leveraging Private Sector Innovation