June 22, 2010, the U.S. Department of Agriculture’s (USDA’s) Grain Inspection,
Packers and Stockyards Administration (GIPSA) published a proposed rule to
implement regulations on livestock and poultry marketing practices as
mandated by the 2008 farm bill (P.L. 110-246). The proposed rule, commonly
referred to as the “GIPSA rule,” added new regulations to clarify conduct
that violates the Packers and Stockyards Act of 1921 (P&S Act). The P&S
Act regulations are used by USDA to ensure fair competition in livestock
and poultry markets.
The 2008 farm bill included new provisions that amended the P&S Act to give
poultry and swine growers the right to cancel contracts, to require the
clear disclosure by poultry processors to growers of additional required
capital investments, to set the choice of law and venue in contract disputes,
and to give poultry and swine growers the right to decline an arbitration
clause that requires arbitration to resolve contract disputes. The farm
bill required USDA to propose rules to implement the farm bill provisions.
In what some saw as a major change from current practice, GIPSA proposed that a
violation of the P&S Act does not require a finding of “harm or likely
harm to competition.” The proposed rule set criteria for “unfair,
discriminatory, and deceptive practices” and “undue or unreasonable preference
or advantages” that violate the P&S Act. The proposed rule also included
arbitration provisions to ensure that contract growers have a meaningful
opportunity to participate in arbitration and the right to decline
According to proponents of the proposed rule implementing the farm bill
provisions, the rule brought fairness to contracts and reshaped
interactions between producers and large meat packers and poultry
processors. Opponents argued that the proposed rule went far beyond the intent
of Congress in the 2008 farm bill, and that the rule altered business
practices to the detriment of producers, consumers, and the industries.
USDA issued the final rule on December 9, 2011, and it went into effect on
February 7, 2012. The final rule, a significant modification of the
proposed rule, included four provisions that address, respectively,
suspension of the delivery of birds, additional capital investments, remedy of
breach of contract, and arbitration.
Before USDA finalized the GIPSA rule in December, Congress enacted in November
2011 Section 721 of the FY2012 appropriations bill (P.L. 112-55), which
prohibited USDA from finalizing the most contentious parts of the rule.
The language from the FY2012 appropriations bill was continued into FY2013
as part of the continuing resolution (P.L. 112-175), which provided
funding through March 27, 2013.
The FY2013 House appropriations bill, H.R. 5973, included Section 719, which
contained the prohibitions on the GIPSA rule from FY2012 appropriations.
In addition, Section 719 also included a provision for USDA to repeal the
four provisions that USDA finalized in 2011. The Senate appropriations
bill, S. 2375, did not contain similar provisions.
Depending on the outcome of appropriations legislation, the repeal of the GIPSA
rule may also become part of the omnibus farm bill debate in the 113th Congress. In the 112th Congress,
the House-reported farm bill, H.R. 6083, included a provision—Section
12105—that repealed the final GIPSA rule and prohibited USDA from
implementing a similar rule.
Date of Report: January 11, 2013
Number of Pages: 39 Order Number: R41673 Price: $29.95
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