President Joe Biden recently issued an Executive Order (EO) to promote competition in the American economy. While a small portion of the EO initiates a rulemaking to correct misleading labels on imported meat, the rest of the order directs the U.S. Secretary of Agriculture Tom Vilsack to institute a rulemaking similar in nature to the 2010 Obama-era GIPSA rules that would interfere with alternative marketing arrangements and other market-based programs. Specifically, the EO directs the secretary to redefine terms in the Packers and Stockyards Act (PSA) like “unfair, unjustly discriminatory, or deceptive” and “undue or unreasonable preference or advantage” and clarify that parties do not need to demonstrate harm to competition to bring an action under PSA. Such a rulemaking would revoke or substantively change a Trump administration rule supported by KLA.
KLA opposes any attempt to remove the harm-to-competition requirement. Removing this requirement could subject nearly all marketing agreements to potential litigation from disgruntled producers or intrusive USDA enforcement actions. PSA was written to prevent injury to the overall functioning of markets, not place USDA in a position to decide whether individual circumstances were disadvantageous to a particular market participant. In other words, the harm-to-competition portion of Vilsack’s announcement is an attempt to ensure equal outcomes instead of equal opportunities. During the Obama administration, similar regulations were proposed to remove the harm-to-competition requirement and KLA and NCBA were successful in defeating those. It is questionable whether USDA can make such a proposal, as eight federal circuit courts of appeal have held PSA requires a finding of harm to competition and Congress has rejected amendments to make such a change to the Act in the past.