Tyson and Leviathan: USDA Rulemaking and the PSA Harm to Competition Requirement

At the intersection of agribusiness regulation and antitrust law, a controversy has been percolating for the past fifteen years over the proper interpretation of the Packers and Stockyards Act (PSA). The PSA prohibits meatpackers and live poultry dealers from using any “unfair, unjustly discriminatory, or deceptive practice or device,”11

and from giving any “undue or unreasonable preference or advantage” to any grower.22 The US Department of Agriculture is the primary regulator tasked with enforcing the law, but farmers can also bring private actions.33 Interpreting the PSA has bitterly divided the Fifth Circuit Court of Appeals, prompted riders in four Congressional appropriations bills and given rise to seesawing USDA rulemaking.44 The question over which courts, regulators, and Congress are divided is simple: must a plaintiff prove harm to competition or likely harm to competition to prove a violation of the PSA? Put more simply: is the PSA a farm-specific antitrust law?

When the Eighth Circuit heard oral argument in a challenge to the Trump Administration’s new PSA regulation, farmers protested the harm to competition requirement outside the St. Louis courthouse.55

The public interest in this question of statutory interpretation is the result of farmers’ experiences litigating the PSA under the harm to competition requirement.66 This requirement demands that farmers present economic evidence regarding competitive effects when seeking to challenge a meatpacker practice that hurts their ability to survive as a small farm or that they consider “unjustly discriminatory” on its face.77 The requirement makes it very difficult for plaintiffs to challenge practices they argue are unfair or discriminatory but that do not have a clear effect on consumer prices‌‌‌—‌like retaliating against growers for their participation in advocacy organizations;88 administering a “tournament system,” in which a grower’s pay is decreased if his or her output is below the regional median;99 or buying cattle using marketing agreements that tie prices to a thin cash market, thus reducing grower compensation.1010

The fight over the PSA has intensified as the meat industry has consolidated dramatically in the past 50 years.1111

Market share of the top four beef-packing firms has risen from 25 percent in 1977 to 82 percent today; from 35 percent to 54 percent in poultry processing, and from 33 percent to 66 percent in hog processing.1212 At the same time, ranchers, pig and chicken growers, and farmers across markets, are collecting a diminishing share of the money consumers spend on food.1313 Farmers and ranchers have become increasingly desperate and their pleas for help more urgent.1414 At a rally in Omaha to “Stop the Stealin’,” cattle market analyst Corbitt Wall, a former USDA employee, told the crowd of cattlemen that they are “at the mercy of the packers” and need regulation to protect them.1515 One of the goals of the Omaha rally was to convince the USDA to make a rule saying the PSA does not require harm to competition.1616

In 2016, the USDA published an interim rule that would have done that, but the rule was repealed after Secretary of Agriculture Sonny Perdue took office.1717

Now, once again, the USDA plans to enact a rule expressing its view that a plaintiff need not prove harm to competition to succeed on a PSA claim.1818 The bitter and protracted nature of the fight over USDA rulemaking poses something of a puzzle. The only court to consider the harm to competition question en banc concluded that the language of the statute is clear, so the agency’s interpretation would receive no deference.1919 Yet the fight over rulemaking suggests a PSA harm to competition rule would influence courts’ interpretation of the statute.

I offer three reasons why the USDA harm to competition rulemaking would be consequential.

First, a USDA rule on harm to competition is a better candidate for deference than a view on the issue announced in adjudication or put forward in an amicus brief, which is what the courts have confronted previously. A USDA rule would require fresh analysis and would be more likely to receive deference than other categories of agency action.

Second, the influential Seventh Circuit cases in which the courts have rebuked the USDA, disagreeing with the interpretation of the PSA it applied in adjudicative proceedings, did not narrow the scope of the PSA to require harm to competition. The Seventh Circuit imposed such a requirement only where the plaintiff claimed competitive harm or when the USDA sought to regulate packer relations with distributors (sell-side PSA cases) rather than farmers.2020

To date, the circuit courts have imposed the express harm to competition requirement in private actions, but not in a USDA regulatory action; 2121 that is, these courts have not ruled against the USDA to impose the harm to competition requirement.

Third, the harm to competition requirement is more unsettled than its proponents have acknowledged. In 2009, the Sixth Circuit saw a “tidal wave” of support for the requirement.2222

But today, the waters are choppy. In the Fourth and Eighth Circuits, which include some of the largest farm-output states, precedent for it is equivocal, and some district courts have squarely rejected it.2323

The importance of USDA rulemaking for farmers’ efforts to enforce the PSA illustrates the significance of the USDA generally to the effective operation of agriculture regulations. In their recent book defending the administrative state, Law and Leviathan, Cass Sunstein and Adrian Vermeule argue that critics of administrative law attend to the risks of federal government action but largely ignore the risks of inaction, including harmful uses of private power.2424

Our agricultural economy in 2022 has acquainted us with some of the risks of inaction: populist anger,2525 risks to public safety,2626 and less redundance and resiliency.2727 As the only entity that can face down Tyson and the other meatpackers on whom farmers and consumers depend, the USDA is farmers’ best hope.

Of appellate courts to consider the harm to competition requirement, only the Fifth Circuit has decided the issue en banc.2828

Its decision in that case, Wheeler v. Pilgrim’s Pride Corp.,2929 endorsed the harm to competition requirement. The vote was nine to seven, with Judge Emilio Garza, who wrote the initial Fifth Circuit decision saying there was no harm to competition requirement,3030 dissenting.3131 The Fifth Circuit opinion is the canonical view among those endorsing the harm to competition requirement. Other circuits have cited it when adopting the requirement.3232 Meanwhile, opinions rejecting the harm to competition requirement have cited Judge Garza’s dissent.3333

The Fifth Circuit in Wheeler concluded that the purpose of the PSA is “to protect competition and, therefore, only those practices that will likely affect competition adversely violate the Act.”3434

It relied on the PSA’s origin as a response to the monopoly of the “Big 5” meatpackers, the Seventh Circuit’s mid-century interpretations of the law, and decisions of several other circuits purportedly affirming the harm to competition requirement.3535 By way of background on the PSA, this Section describes the Wheeler court’s interpretation of the legislative history of the PSA and an early Supreme Court decision finding it to be constitutional, noting objections to the majority’s reasoning along the way.

The PSA was a product of the same moment in American history that produced the core antitrust laws: the Sherman Act, Clayton Act, and Federal Trade Commission Act.3636

While the Sherman Act took aim at the great “trusts” that pooled economic strength of competing enterprises to expand control over each industry in which they were formed,3737 the goals of the PSA were at once narrower and broader. They were narrower in that the PSA is limited to one sector of the economy, but broader in that it promised more aggressive and direct regulation of the industry in which it operated.3838

Congress passed the PSA shortly after the Federal Trade Commission (FTC) published a report on the meatpacking industry in 1918 and 1919.3939

As FTC Chairman William Colver described the agency’s findings, the FTC concluded that the “Big 5” meatpackers (Armour, Swift, Morris, Wilson, and Cudahy) had gained an “unfair advantage . . . over producer, consumer, and competitor,” resulting from their control of stockyards and the means of transportation of livestock.4040 The FTC concluded that the packers’ consolidated ownership over the industry was not in the public interest, but it did not recommend a full government takeover of the packers, which was a legislative proposal under consideration at that time.4141 Among the powers of the Big Five that the agency identified as “unfair[] and illegal[]” were their ability to “[m]anipulate live-stock markets,” “[c]ontrol the prices of dressed meats,” and “[s]ecure special privileges from railroads.”4242 The Department of Justice sued each of the Big Five packers for violating the Sherman Act in 1920, and the packers entered into a consent decree with the DOJ in 1920.4343 Apparently unsatisfied that the consent decree would resolve its concerns, Congress passed the PSA in 1921.4444 True to the FTC’s concern with the actions of the Big Five, the statute only applied to large stockyards.4545

The PSA is broader than antecedent antitrust legislation in that it grants the Secretary of Agriculture more authority to regulate the meatpacking industry than the FTC’s authorizing statute granted to that agency. The Secretary of Agriculture can, for example, regulate stockyard rates and assess monetary penalties against stockyard operators who violate his commands.4646

The House Report on the legislation went so far as to say that a “careful study of the bill, will . . . convince one that it . . . is a most comprehensive measure and extends farther than any previous law in the regulation of private business, in time of peace, except possibly the interstate commerce act.”4747 The § 202(a) prohibition on “any unfair, unjustly discriminatory, or deceptive practice or device”4848 by a packer or stockyard, was part of a larger scheme granting the USDA significant authority to directly regulate the practices of meatpackers and stockyard operators.4949

The Supreme Court first confronted the PSA in Stafford v. Wallace, 5050

with Chief Justice William Howard Taft rejecting a Commerce Clause challenge to the law brought by the packers. While the Wheeler court took this opinion as definitive support for the harm to competition requirement, Judge Garza disputed that conclusion in his dissent;5151 the argument from Stafford is not a slam dunk. In Stafford, Chief Justice Taft set forth the context and purpose of the PSA to explain what brought it within Congress’s power under the Commerce Clause.5252 He described its purpose as follows:

The object to be secured by the act is the free and unburdened flow of live stock from the ranges and farms of the West and the Southwest through the great stockyards and slaughtering centers on the borders of that region, and thence in the form of meat products to the consuming cities of the country in the Middle West and East.5353

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Describing the mode of regulation contemplated by the PSA, Chief Justice Taft wrote that it “treats the various stockyards of the country as great national public utilities to promote the flow of commerce from the ranges and farms of the West to the consumers in the East.”5454

He went on to cite a challenge to antitrust regulation of meatpackers in Swift & Co. v. United States5555 in support of his determination that the PSA is within Congress’s Commerce Clause power. The principle established in that case, as he saw it, was that even intrastate agricultural transactions could be regulated, as instrumental to the interstate flow of agricultural goods throughout the country.5656 He wrote:

The application of the commerce clause of the Constitution in the Swift Case was the result of the natural development of interstate commerce under modern conditions. . . . It is manifest that Congress framed the Packers and Stockyards Act in keeping with the principles announced and applied in the opinion in the Swift Case.5757

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The Fifth Circuit in Wheeler concluded that the Supreme Court held the PSA to be constitutional “because it protects competition and opposes combinations in restraint of trade,” an objective the Court previously accepted in Swift. 5858

From this perspective, the PSA is an agriculture-specific antitrust enforcement mechanism. As Chief Justice Taft wrote, “If Congress could provide for punishment or restraint of such conspiracies after their formation through the Anti-Trust Law as in the Swift Case, certainly it may provide regulation to prevent their formation.”5959

The Wheeler majority’s argument can be summarized as follows: The Supreme Court only upheld the PSA because protecting competition in interstate commerce from conspiracy and monopolization is constitutional. Thus, enforcement of the PSA is only constitutional under the commerce clause insofar as it protects competition. Stafford, however, is primarily concerned with establishing Congressional authority to regulate intrastate packer and stockyard activity, not with the limits of that authority.6060

The core holding is that because of the “natural development of interstate commerce,” strictly intrastate livestock transactions are in fact a part of interstate commerce, allowing for their regulation by federal law.6161 To the extent the Wheeler gloss on Stafford focuses on Chief Justice Taft’s interpretation of Congressional intent, Judge Garza responds appropriately that Taft’s decision “spoke of monopoly as the ‘chief’ evil against which the PSA protects, not as the ‘only’ evil.”6262

The concept of competitive harm is vague but important. Admittedly, it has been interpreted more loosely in some courts than in others. In Judge Harris Hartz’s concurrence in Been v. O.K. Industries,6363

he observed that the concept of competitive harm the majority endorsed appeared to be capacious enough to cover any conduct a court might consider “unfair.”6464 But debate over the requirement has been so fierce because it gives courts license to impose high burdens of proof that can only be satisfied with economic evidence.6565 Two recent cases in the Eleventh Circuit illustrate how it operates.

The 2021 case Breaking Free v. JCG Foods of Alabama6666

shows the difficulties the harm to competition requirement creates for an individual PSA plaintiff who challenges a widespread practice as unfair; even if the practice in general may harm competition, the plaintiff’s evidence only shows harm to him or herself.6767 In Breaking Free, chicken grower Connie Buttram sued chicken company Koch Foods for allegedly cutting off her contract because of her husband’s involvement in an association of chicken growers and his participation in a documentary by Morgan Spurlock (of Super Size Me fame6868 ) on the chicken industry.6969 The court dismissed Buttram’s claims on the basis that she only alleged harm to her own farm, not harm to the market at large.7070 The court noted that it found no authority for the proposition that “evidence of a plaintiff’s individual damages can show likely competitive harm to an industry at large.”7171

Even the allegation that the specific challenged practice is widespread is unlikely to save a PSA claim under the harm to competition regime. This is because, first, it is difficult to prove industry-wide harm, even when the practice is common, and second, the defendant can often claim a procompetitive justification. In Breaking Free, the court rejected Buttram’s contention, supported by the testimony of economist C. Robert Taylor, that pervasive fear of retaliation by chicken growers reduces grower compensation.7272

It concluded that Buttram had not presented evidence adequate to create a triable issue of fact as to whether Koch’s retaliation decreased overall grower pay.7373 It also held that even if Koch’s practices did decrease grower pay, they could not violate the PSA because Koch had a clear procompetitive justification: it removed chickens from Buttram’s farm because her husband’s involvement with the Spurlock documentary (he raised chickens as part of that project) could contaminate the Koch flock.7474

Claims that sound in harm to operation of the market, and not a broader concept of unfairness, are also difficult to bring under the PSA harm to competition regime. Meatpackers are often able to claim that their practices benefit the consumer and are thus “pro-competitive” even if they depress prices for growers. For example, a 2005 Eleventh Circuit case, Pickett v. Tyson Fresh Meats, Inc.,7575

shows the uphill battle growers face in proving a pervasive industry practice harms competition. Pickett was an early challenge to a then-new practice in cattle markets in which meatpackers would buy pens of cattle at a price tied to the prevailing cattle market price, rather than buying each pen at auction individually.7676 A class of ranchers challenged Tyson’s use of these “Alternative Marketing Arrangements” on the ground that the agreements were removing buyers from auctions, thus pushing down the price Tyson paid for cattle at those auctions and then, by extension, the prices it paid under the marketing arrangements that were tied to the auction price.7777 The trial judge instructed the jury that Tyson’s use of the agreements only violated the PSA if it harmed competition and had no legitimate procompetitive justification.7878 Finding both conditions for liability satisfied, the jury awarded $1.2 billion to the class of ranchers for Tyson’s PSA violations.7979 The trial judge threw out the verdict on the basis that no reasonable jury could find that there was no legitimate procompetitive justification for Tyson’s use of these alternative marketing arrangements.8080 The Eleventh Circuit affirmed.8181

The Eleventh Circuit’s formulation of the PSA harm to competition requirement is extremely adverse to efforts by growers to prove PSA claims because it requires them to show the practice not only harms competition, but harms competition more than the packer benefits from the practice.8282

It accepted several of Tyson’s justifications for its use of the marketing agreements as adequate to overcome Pickett’s showing that the agreements harm competition: the agreements secure for Tyson a “reliable and stable supply of cattle for its packing plants;”8383 they reduce transaction costs because they eliminate costly and time-consuming auctions;8484 and they allow Tyson to encourage growers to produce high-yield cattle.8585 It suggested the jury, in awarding $1.2 billion to ranchers, was swayed by a romantic appeal to the historic independence of cattle ranchers rather than the ranchers’ claims of market harm.8686 “The PSA was enacted to ensure that the market worked, and markets are notoriously unromantic,” Judge Ed Carnes wrote for the Eleventh Circuit.8787 The court concluded that Tyson had good reasons for using a purchasing method that depressed the price the ranchers receive for their cattle, and that the PSA would not interfere with the operation of such contracts, into which ranchers freely entered.8888 While the Pickett court did not cite antitrust precedents, its approach to market harm is consistent with the “consumer welfare standard” in antitrust, under which consumer prices are the primary lodestar for evaluating allegations of antitrust harm.8989

While the Pickett court did not cite antitrust cases, it stated that the PSA was “enacted to prevent unfair practices, price fixing and manipulation, and monopolization.”9090

The courts’ experience with protecting competition and preventing monopoly comes primarily from the antitrust laws and thus these references to an anti-monopoly focus suggest a reliance on methods of reasoning developed in antitrust law. This reliance on antitrust reasoning is most apparent when courts say they are applying a “rule of reason” analysis, assessing whether a challenged practice’s competitive benefits outweigh its harms.9191

The problem this creates for growers alleging PSA violations arises from the focus in modern antitrust law on the consumer interest. Since the late 1970s, it has been widely accepted that the antitrust laws serve economic efficiency.9292

While consumer benefit is not a perfect proxy for economic efficiency, courts typically accept that “consumer welfare” is a good metric of the efficiency goals that antitrust seeks to serve.9393 “Consumer welfare” is not a dogma of modern antitrust practitioners and scholars—‌and much recent economic antitrust research shows how practices that may seem facially to benefit consumers hurt economic efficiency9494 —‌but nonetheless courts following the modern antitrust method often look to short-term consumer outcomes to determine whether a practice should be illegal under the antitrust laws.9595 Harms of monopsony or collusion by purchasers are recognized under antitrust laws,9696 but they have not been a primary focus of enforcement efforts.9797 A rising antitrust movement, which counts the current leaders of the two federal antitrust agencies among its adherents, argues antitrust should promote goals beyond economic efficiency, such as protecting small producers.9898 But this remains a fringe position. The Pickett court’s derision of the idea of using law to protect a system of small producers is typical of modern antitrust law.9999 This is the problem the harm to competition requirement poses for PSA grower plaintiffs: it makes it difficult to challenge a packer practice that hurts them, but plausibly benefits consumers in the short term.

One option for courts seeking to cut through the confusion on the harm to competition requirement is to defer to the USDA’s interpretation of the statute. In this Section, I explain the USDA’s role in enforcing the PSA and explore the consequences of that institutional design for deference to the agency under Chevron and the administrative deference regime that may succeed it. I conclude that the agency enacting its position in a formal rule would dramatically improve the agency’s argument for deference. I then describe the agency’s recent, halting efforts to enact such a rule, arguing that the back-and-forth over the rule has hurt the agency’s argument for deference because it has made the agency’s position inconsistent. I conclude, however, that much of the damage done would be repaired by a successful rulemaking.

Under Chevron,100100

courts defer to the interpretation of an agency tasked with interpreting an ambiguous statute.101101 Where Congress has left a gap for an administrative agency to fill, a court may not substitute its own interpretation for a reasonable interpretation made by the administrator of an agency.102102 While the USDA has consistently argued that its interpretation of the PSA is deserving of Chevron deference,103103 the Wheeler court rejected that argument on the basis that the PSA is unambiguous.104104 It held that deference is “unwarranted where Congress has delegated no authority to change the meaning the courts have given to the statutory terms.”105105 In support of its conclusion, it argued that the Seventh Circuit previously rejected the USDA’s interpretation of the statute that the agency had announced in an adjudication.106106 In dissent, Judge Garza agreed that the USDA’s interpretation is not entitled to deference “because the PSA is unambiguous.”107107 But he showed more of an interest in listening to the agency’s perspective on the issue, arguing the court should “give respect to the experience and expertise” of the agency and noting the USDA has consistently rejected the harm to competition requirement.108108

Other courts have looked beyond the question of statutory ambiguity to ask whether the design of PSA enforcement means the USDA’s interpretation of the statute is deserving of deference. In conducting this Chevron Step Zero109109

analysis, these courts have asked whether the USDA’s interpretation of the PSA is the kind of agency interpretation that should be granted Chevron deference. Both the Tenth and Eleventh Circuits have conducted this analysis. They emphasized the structure of USDA authority, concluding that the USDA’s interpretation of the statute as it concerns poultry dealers was not deserving of deference110110 because the agency does not have adjudicatory authority over those companies.111111

Of the decisions endorsing the harm to competition requirement, Judge Deanell Reece Tacha’s decision in Been v. OK Industries112112

showed the most openness to deference to the USDA. She noted that “[r]egulations promulgated by an agency exercising its congressionally granted rule-making authority are clearly entitled to Chevron deference,” as is the agency’s “adjudication of matters over which it has the authority to adjudicate.” 113113 In Judge Hartz’s Been concurrence, he observed that not deferring to the agency’s decisions with regard to live poultry dealers is “peculiar,” given that the Been majority relied for its construction of the statute on cases concerning the application of the USDA to packers, “in which Chevron deference would have been proper.”114114

Nothing in the design of the PSA precludes a court from deferring to the USDA’s interpretation of the statute. First, the PSA is “ambiguous” regarding the exact contours of the PSA’s prohibitions.115115

The debate among courts over the meaning of the statute’s terms suggests as much. Second, the USDA adjudicates violations of the PSA by meatpackers and is thus “entrusted to administer” the statute with respect to them.116116 Third, courts defer to agency interpretations of similar statutes. For example, in FTC v. Sperry & Hutchinson Co.,117117 the Supreme Court set forth the proper design of appellate review of the FTC’s statutory mandate to enforce against “unfair methods of competition” and “unfair or deceptive acts or practices.”118118 It concluded that the appellate court could properly review whether the FTC acted reasonably when it concluded that a practice was “unfair” in violation of the FTC Act but that it could not substitute its judgment for the FTC’s on the scope of the prohibition on unfair practices.119119 It rejected the court of appeals’ imposition of a harm to competition requirement in FTC Act cases when the FTC had determined that no such showing was required to prove a violation of the FTC Act.120120 While this decision preceded Chevron, it establishes that Chevron-like deference is appropriate where Congress gives an administrative agency the authority to adjudicate the bounds of a vague Congressional prohibition on unfair practices.121121

A successful rulemaking on the PSA would put the agency’s position on the harm to competition question in a significantly better position to receive Chevron deference. While Wheeler found the PSA unambiguous, London and Been both focused on the structure of PSA enforcement and the extent to which Congress delegated authority to define the scope of the PSA. Successful notice-and-comment rulemaking would give the agency a better claim that it is exercising congressionally delegated authority to define the exact bounds of the PSA.122122

The Supreme Court has cast doubt on the future of Chevron in recent years; observers predict the Court will soon narrow the reach of Chevron or perhaps do away with it altogether.123123

This trend is significant for the question of deference to the USDA’s interpretation of the PSA, as decisions on deference to the USDA may well be made in a post-Chevron world. That world could still allow for deference to the USDA under Skidmore v. Swift & Co.,124124 and prospects for deference would be significantly improved by formal rulemaking.

Chevron deference today is sufficiently imperiled to be almost an anti-canon, with litigants raising it only as a last resort.125125

Justices Clarence Thomas and Neil Gorsuch have suggested that Chevron deference may be unconstitutional, while Justice Brett Kavanaugh has questioned the breadth of the doctrine.126126 Even if the Court does expressly abandon Chevron, that likely would not be the end of administrative deference altogether. Today, when courts decline to defer to an agency interpretation under Chevron, they typically apply the older approach to administrative deference described in Skidmore v. Swift & Co.127127 Under Skidmore, courts may consider various factors in determining how much weight to give an agency’s interpretation of a statute. The Skidmore court originally identified four such factors, writing: “The weight of such a judgment in a particular case will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.”128128 Kristin E. Hickman and Matthew D. Krueger have distilled the Skidmore analysis, as glossed by the Supreme Court in the modern cases that revived it, down to five factors: “thoroughness, formality, validity, consistency, and agency expertise.”129129

These factors suggest the USDA interpretation of the PSA may be entitled to some weight even if not enacted in rulemaking,130130

but that the prospects for deference would be much better after a successful rulemaking. The formality question is most straightforward, as notice-and-comment rulemaking is the paradigmatic example of a formal agency process.131131

Application of the consistency prong of the Skidmore analysis is complicated by the recent back-and-forth over rulemaking. While in 2007 the USDA stated in its brief in Wheeler that the agency has “never state[d] that adverse effect on competition is a necessary element of a [PSA claim],”132132

the USDA has recently waivered on enforcing the PSA outside of its application to antitrust harms.133133 A formal rulemaking may also alleviate doubts caused by this recent inconsistency, however. As I explain below, the USDA rescinded a rule that would have rejected the harm to competition requirement, but it never expressly endorsed the requirement. A court may see a formal rule as the culmination of an extended political fight, consistent with the agency’s long-held historical position and thus supporting the long-term consistency of the agency’s view on harm to competition.

Rejecting the harm to competition requirement in a formal rule may also influence how a court weighs the remaining factors: thoroughness, validity, and agency expertise. Agency decisions embodied in a formal rule have been historically more likely to receive deference than decisions made in adjudication, as Hickman and Aaron L. Nielson note in a recent article on the future of administrative deference.134134

They go on to argue that formal rules are better candidates for deference because of the institutional features of rulemaking.135135 Many of the advantages they identify, including information gained through the notice-and-comment process and the public record of the agency’s thinking that the process develops, indicate that the process improves the thoroughness, validity and expertise brought to bear on agency decision-making.136136 The outcome of Skidmore review is impossible to predict, in part because its dictates remain unsettled.137137 Still, the chances of deference would be improved by formal rulemaking.

The USDA first considered formalizing its approach to the harm to competition requirement in a rule in 2008, on a mandate from Congress. The result was a bitter political fight, with the USDA no closer to enacting such a rule today than it was 14 years ago. To summarize: the USDA proposed a draft rule interpreting the PSA, was prohibited by Congress from finalizing that rule, proposed it again, then withdrew it and promulgated a rule setting forth a different interpretation of the PSA. In 2021, it announced plans to reverse the interpretation it had just finalized.

In the 2008 farm bill, Congress mandated that the USDA publish a rule clarifying its interpretation of the PSA.138138

The USDA published its proposed rule in June 2010.139139 On § 202(a) and (b), the proposed rule stated:

The appropriate application of section 202(a) and (b) of the Act depends on the nature and circumstances of the challenged conduct. A finding that the challenged act or practice adversely affects or is likely to adversely affect competition is not necessary in all cases. Conduct can be found to violate section 202(a) and/or (b) of the Act without a finding of harm or likely harm to competition.140140

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The supplementary information accompanying the rule offered an analysis of the history and interpretation of the PSA and said the USDA disagreed with the Been, London, and Wheeler decisions.141141

It described conduct brought to its attention at public meetings that it considered unfair or unjustly discriminatory, to illustrate the need for new regulations.142142

The USDA’s proposed regulation also provided eight examples of conduct the agency considered unfair and in violation of the PSA.143143

These included “unjustified material breach of a contractual duty” and retaliation against growers for participating in grower associations, among other practices.144144 It also specified circumstances in which a packer practice would likely cause competitive harm.145145 For example, a packer or poultry dealer “wrongfully depress[ing] prices paid to a producer or grower below market value or impair[ing] the producer or grower’s ability to compete with other producers or growers” would likely harm competition.146146 It further provided that “[d]isparate treatment of similarly situated growers and producers can be a violation of the P&S Act when that disparate treatment is undue or unreasonable.”147147 The proposed regulation included specific rules for the poultry tournament system, including a requirement that all growers compensated through such a system receive the same base pay.148148

As it turned out, Congress blocked the USDA from finalizing the rule.149149

On November 3, 2011, the USDA notified interested parties that it sent an interim final rule to the Office of Management and Budget for final review.150150 Fifteen days later, on November 18, 2011, Congress enacted the FY2012 Agriculture Appropriations Act barring the USDA from finalizing the sections of the rule describing the scope of the PSA.151151 The USDA issued its final rule on livestock and poultry marketing practices on December 9, 2011.152152 The regulation did not finalize the rule on the harm to competition requirement or the examples of conduct that would violate § 202(a) or (b).153153 The preamble stated that comments on the proposed rule were “sharply divided” with respect to the PSA and the harm to competition requirement.154154 It continued:

Those supporting the proposal pointed out it would provide legal relief for farmers and ranchers who suffer because of unfair actions, such as false weighing and retaliatory behavior, without having to show competitive harm. Opposing comments relied heavily on the fact that several of the United States Courts of Appeals have ruled that harm to competition (or the likelihood of harm to competition) is a required element of a violation of sections 202(a) and (b) of the P&S Act.155155

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Congress continued to block the USDA from finalizing the PSA rule in the FY2013,156156

FY2014157157 and FY2015158158 appropriations laws.159159 The FY2013 appropriations law went further, requiring the USDA to rescind regulations on poultry dealers that did go through in 2011, including a requirement that companies give growers ninety days’ notice before canceling their contracts to raise chickens.160160 The FY2016 appropriations bill did not include the rider barring publication of the PSA rule, and in December of 2016, the USDA published an interim final rule stating that a showing of harm to competition is not required to prove a violation of the PSA.161161 The rule was to go into effect on February 21, 2017.162162

Instead, the USDA withdrew the interim final rule following the change in presidential administrations in 2017.163163

In its explanation for withdrawing the rule, the USDA focused primarily on the conflict the rule would create with rulings endorsing the harm to competition requirement.164164 It concluded that the Fifth and the Eleventh Circuits were unlikely to give deference to the USDA’s interpretation of the PSA, so the rule would conflict with precedent in those circuits.165165 It also found the rule would conflict with precedent in the Sixth and Tenth Circuits, which impose the harm to competition requirement but have not categorically refused to defer to the USDA’s interpretation.166166 The USDA acknowledged that the position stated in the interim rule was the agency’s “longstanding position,” and also found that commenters had overstated the extent of opposition in the circuits to that position.167167 But the contrary position of the Fifth and Eleventh Circuits meant the rule had to be abandoned. The agency concluded that “because at least two courts of appeals have held that the text of the P&S Act unambiguously forecloses USDA’s longstanding interpretation, allowing the [interim final rule] to go into effect would create an unworkable legal patchwork.”168168 In 2020, the USDA promulgated a rule that serves as a partial replacement, stating the factors it considers when deciding whether a packer violated § 202(b) of the PSA.169169 That rule, finalized on December 11, 2020, does not take a position on the competitive harm question.170170

The rule specifies four criteria the USDA may consider when determining whether a meatpacker or poultry dealer has given an “undue or unreasonable preference or advantage.”171171

It effectively establishes provisional safe harbors for preferences or advantages provided by packers or poultry companies. All four justifications for a preference or advantage are related to whether the packer has a legitimate business rationale for the preference.172172 While the USDA originally had proposed a safe harbor for preferences “customary in the industry,”173173 it replaced that provision with one suggesting that preferences “justified as a reasonable business decision” are acceptable.174174 Commenters criticized the proposal as overly broad and legitimating harmful packer practices, but the USDA responded that the rule “balance[s] the interests of all segments of the livestock, meat, and poultry industries.”175175 It also emphasized consumer interests in its justification, writing that the rule “provide[s] a framework from which both producers and processors can benefit, while not harming consumers.”176176 The agency noted that the criteria can be used to determine a preference is illegal, because if the proposal cannot be justified for any of the legitimate reasons provided, that would suggest it is more likely to violate the PSA.177177

Perhaps more important to the shape of PSA regulation than the proposed rule, the USDA also reorganized during Secretary Sonny Perdue’s tenure,178178

eliminating the Grain Inspectors, Packers and Stockyards Administration as a separate division of the USDA and placing it within the agency’s Agricultural Marketing Service (AMS).179179 The USDA formally codified the change in a rule published on November 29, 2018, giving the AMS administrator authority to administer the Packers and Stockyards Act.180180 The Organization for Competitive Markets, a farmers’ trade group, criticized the reorganization, calling it the “death knell for antitrust enforcement in the meatpacking industry,” because of the Agricultural Marketing Service’s collaborative work with meatpackers in its marketing role.181181 The Packers and Stockyards Division is now a sub-sub-division of the USDA, within AMS’s Fair Trade Practices program.182182

The saga of the USDA interpretation of the PSA harm to competition requirement is not over. In June of 2021, the USDA announced its intention to re-propose a rule stating that parties bringing PSA claims do not need to show harm to competition.183183

It also said it hopes to use the rule to strengthen enforcement against unfair and deceptive practices.184184 In a fact sheet on the PSA published in August 2021, the USDA said the 2020 rule does not provide a complete safe harbor and specified that the criteria it established are not determinative.185185 That fact sheet provides examples of packer practices the USDA may investigate for violations of the PSA and identifies several suspect practices, including retaliation for membership in grower organizations and inadequate documentation of factors influencing grower pay, that have no evident connection to antitrust harm.186186

As the USDA itself acknowledged when rescinding its earlier harm to competition rule, courts would have good reason to defer to a USDA harm to competition rule—enactment of the USDA’s position in a formal rule would offer an additional reason to defer to the agency.187187

In the next section, I explain why deferring to a broad USDA rule of this kind—‌saying the PSA does not require harm to competition—‌is consistent with courts’ historical practice in reviewing USDA decisions.

One of the arguments advanced against deferring to the USDA on harm to competition is that such deference has not been the consistent practice of courts that have evaluated the PSA. In addition to the forward-looking response to this argument that I advance above—‌that courts have yet to confront a formal rule on harm to competition and that such a rule would be more deserving of deference—‌I address in this section the extent to which the Seventh Circuit has refused to defer to the USDA in PSA adjudications. I argue that the seminal Seventh Circuit adjudication decisions required harm to competition in some but not all circumstances: when the agency alleged harm to the competitive process, or unfairness in packer sales practices, but not when the agency alleged unfairness in packers’ dealings with growers. This approach makes sense. Enforcing a “fairness” mandate in commercial dealings between packers and grocery stores, for instance, would be unwieldy and could directly conflict with antitrust law. More importantly, it would overextend the PSA to a point where it would govern commerce generally (the domain of antitrust) rather than protecting farmers and consumers (the proper domain of the PSA). These Seventh Circuit decisions do not provide good precedent for courts to overrule a USDA rule saying the PSA does not require harm to competition in all circumstances.

One of the earlier Seventh Circuit PSA cases, Swift & Co. v. United States,188188

illustrates the court’s approach when the plaintiff alleges competitive harm. In Swift, the Seventh Circuit considered a USDA enforcement action against packer Swift over two practices: an agreement not to bid against a rival hog dealer following intense competition between Swift and the dealer, and dealers calling Swift to find out the prices it would pay them for hogs.189189 The USDA challenged both practices for interfering with proper competition among hog buyers.190190 The Seventh Circuit agreed regarding the first claim on the authority of its previous holding that packer bid-rigging violated the Sherman Act.191191 It rejected the second claim, however, finding that the price sharing was a forward contract that strengthened competition in hog markets, since it allowed dealers to secure guaranteed minimum prices.192192 Critically, the USDA had “claim[ed] that [the price sharing] practice eliminated competition.”193193 Swift was entitled to review of that contention, and the Seventh Circuit found the USDA was wrong about the practice’s competitive effects.194194 Applying antitrust learning only where the USDA alleged harm to competition followed from the court’s reading of the statute; it stated that the PSA is “broader in scope than antecedent legislation such as the Sherman Antitrust Act [and other antitrust laws].”195195

Meatpackers are middlemen—‌buying and slaughtering livestock and then selling meat—‌and the Seventh Circuit has looked beyond the PSA to determine its proper scope most often when it has considered challenges to meatpackers’ practices as sellers. When the USDA has challenged a practice that is common in business generally, and not one of the “special mischiefs and injuries inherent in livestock and poultry traffic,”196196

it has required the USDA follow principles of market regulation elucidated in other areas of law, including antitrust.

The Seventh Circuit established this approach early on. In one of the earliest Seventh Circuit PSA decisions, Swift & Co. v. Wallace,197197

it focused on the competitive consequences of the challenged practice, preferential credit terms a meatpacker gave to institutional buyers, like schools and cruise ships, over intermediary meat sellers (purveyors).198198 It threw out the USDA’s order that Swift cease giving thirty-day credit terms to institutional buyers unless it began giving the same credit terms to any buyer with a certain minimum credit rating.199199 The Seventh Circuit looked to broader principles of market regulation to determine whether the PSA bars preferential treatment regarding credit terms.200200

Competition factored into the court’s analysis in two ways, neither of which was directly related to antitrust law. First, institutional buyers demanded long credit terms.201201

This was not because of any peculiar characteristic of the meat business, but because public institutions were generally unwilling or unable to pay their bills on a weekly schedule.202202 As a result, Swift needed to extend credit for longer than a week to compete with other companies seeking to sell to public institutions, including purveyors.203203 The court took this as strong evidence of the reasonableness of the practice.204204 Second, the packers competed with purveyors (also their customers) for the business of institutional buyers, but the purveyors did not compete against the institutional buyers.205205 The court cited to Supreme Court precedent interpreting similar unjust discrimination provisions enforced by the Interstate Commerce Commission for the proposition that unjust discrimination is of particular concern when a middleman tips the scales in favor of one of two competing enterprises.206206 Conversely, a preference given when the two customers are not competing is not as much of a concern.207207 The real competition was between packers selling directly to institutions and purveyors, and the Seventh Circuit did not want to use the PSA to limit Swift’s ability to compete against the purveyors.208208 It viewed such use as beyond the scope of the PSA.209209

Underlying the Seventh Circuit’s focus on competition in Swift & Co. v. Wallace was a concern that the USDA was regulating commerce beyond the scope of its authority. It summarized its concerns:

Perhaps the fundamental difficulty is that the Secretary of Agriculture is in fact attempting to exercise authority to enforce uniformity of discount terms, terms of credit, and trade practices in the business of distribution of packers’ products. We do not think that the Packers and Stockyards Act confers such extensive authority upon the Secretary. . . . [S]uch a program . . . presupposes a power at least as comprehensive as the power of the Interstate Commerce Commission in its field, and such as can be exercised effectively only by treating the packing industry as a public utility.210210

210

Id. at 862–‌63.Hide

The USDA was challenging practices accepted in business generally, not just in the meat industry.211211

Then it tried to resolve its concerns by extensively regulating Swift’s business practices, requiring it to offer its supposedly unreasonable discounts to additional customers.212212 Nothing in the PSA’s text or history indicated that it authorized this kind of broad market regulation.213213

In the 1960s, the Seventh Circuit decided several cases in which it had to wrestle with the extent to which antitrust precedents are relevant in determining whether a packer sales practice is unfair under the PSA. The court made clear that the scope of the PSA is wider than that of the antitrust laws, but nonetheless incorporated antitrust reasoning into some of its PSA unfairness decisions. The court outlined this approach in Wilson & Co. v. Benson,214214

in which it upheld a USDA order finding meatpacker Wilson violated the PSA when it slashed prices to push out a smaller competitor headed by a former employee.215215 At the outset, the court noted that the PSA reaches farther than the antitrust laws.216216 But, in concluding that Wilson’s price-cutting violated the PSA, it referred to the policy on competition Congress outlined in the antitrust laws, citing the Congressional determination that “certain forms of price competition are not in the public interest.”217217 It noted that § 202(a) bars violations of the Clayton Act, and cited Supreme Court Clayton Act precedent from the previous year—‌Federal Trade Commission v. Anheuser-Busch, Inc.218218 —‌holding that price discrimination limited to a particular geographic market that is intended to push out competitors in that market can violate the Clayton Act.219219 The situation in Wilson was closely analogous to the situation in Anheuser-Busch; in both cases a national seller slashed prices in a specific geographic region and dramatically boosted its sales there.220220 Taking its cues from the Supreme Court’s recent antitrust jurisprudence, the Seventh Circuit found that Wilson’s geographically limited below-cost pricing violated the PSA.221221

The Seventh Circuit harmonized enforcement of the PSA against packer sales practices more closely with antitrust law in Armour & Co. v. United States,222222

concluding that a packer coupon promotion does not violate the PSA “absent some predatory intent or some likelihood of competitive injury.”223223 The court noted at the outset that the case was “admittedly a test case to determine the validity of coupon promotion plans under the Packers and Stockyards Act,” limiting its requirement of proof of harm to competition to coupon programs.224224 In determining whether the coupon practice violated the PSA, the Armour court referred to several antitrust decisions from other food businesses, such as oat flour and ice cream.225225 Those decisions barred below-cost pricing where there was intent to eliminate competition.226226

The factual circumstances the Seventh Circuit emphasized show it wanted to harmonize sell-side PSA regulation with other commercial regulation, and particularly food sales regulation. It noted that Armour’s promotion—‌on thick-sliced bacon—‌was intended to introduce consumers to a new, potentially high-profit item, to the benefit of consumers as well as other meatpackers.227227

It mentioned that “[c]oupon practices [were] widespread in the food industries and [had] been employed by Armour’s competitors.”228228 And the promotion was “inspired by an outside advertising agency” (whose activities presumably were not limited to the meat industry).229229 As in Swift & Co. v. Wallace, the Seventh Circuit worried that a contrary ruling would extend the USDA’s authority beyond what Congress intended.230230 It wrote that the PSA does not “give the Secretary of Agriculture complete and unbridled discretion to regulate the operations of packers.”231231

The Seventh Circuit’s statement in Armour of the scope of the PSA conveys the rationale for different treatment of practices specific to the meatpacking business and those common in commerce generally: “Section 202(a) should be read liberally enough to take care of the types of anti-competitive practices properly deemed ‘unfair’ by the Federal Trade Commission . . . and also to reach any of the special mischiefs and injuries inherent in livestock and poultry traffic.”232232

It would not make much sense to ban coupon discounting in the meat business but not elsewhere in the marketplace. While the legislative history of the PSA shows concern with the fate of small butchers and other meat retailers,233233 analogous concerns were expressed when the antitrust laws were passed and by some courts interpreting those laws.234234 Coupon discounting is not a “mischief” special to the meatpacking business.235235

The Seventh Circuit endorsed a competitive harm requirement in another sell-side PSA case in Pacific Trading Co. v. Wilson & Co.236236

In Pacific, the Seventh Circuit affirmed a district court decision throwing out a private PSA enforcement action over the sale of poor-quality hams, finding that the PSA did not then allow for enforcement by private plaintiffs.237237 The Seventh Circuit attached the district court’s memorandum opinion as an appendix to its ruling affirming that decision.238238 That memorandum opinion described the PSA as “prohibiting a variety of unfair business practices which adversely affect competition.”239239 The decision is weak precedent, however, for a broad harm to competition requirement. First, the case was thrown out on the grounds that “the proper party to enforce [the PSA] is the Secretary of Agriculture.”240240 This shows a skepticism of private plaintiffs alleging a practice is unfair or deceptive without the support of the Secretary of Agriculture, but does not imply a harm to competition requirement for claims brought by the USDA.241241

Additionally, for his competition-focused description of the scope of the PSA, district Judge William Lynch (whose opinion the Seventh Circuit affirmed and appended to its decision in Wilson) pointed to Bruhn’s Freezer Meats v. United States Department of Agriculture.242242

In Bruhn’s, the Eighth Circuit upheld a USDA finding that a meatpacker’s delivery to customers of lower-grade beef than it promised was unfair and deceptive in violation of § 202(a).243243 Bruhn’s made no reference to competition or the antitrust laws and interpreted the PSA as providing extensive power to the USDA:

The Act was framed in language designed to permit the fullest control of packers and stockyards which the Constitution permits, and its coverage was to encompass the complete chain of commerce and give the Secretary of Agriculture complete regulatory power over all packers and all activities connected therewith.244244

244

Id. at 1339.Hide

The Wilson decision also shows the Seventh Circuit’s concern, present in Armour, with over-extending the PSA to cover commercial transactions that are not unique to the meatpacking industry. Plaintiffs in Wilson were sold poor-quality goods and then tried to recover the money spent on those goods.245245

While the regulatory scheme governing salability of meat could set this transaction apart from other contract breach claims,246246 the court gave no indication that defendant used that regulatory scheme to carry out the alleged deception. Instead, plaintiffs alleged a standard breach of contract, unrelated to a “mischief” unique to the meatpacking industry, and the PSA did not convert it to a federal claim.247247 The thrust of the opinion was that private parties were not the proper plaintiffs to enforce the PSA and, to the extent the court went beyond that, it, like the Armour court, was skeptical of applying stricter regulations than those imposed by antitrust law to standard commercial transactions that happen to involve meatpackers.248248

The consequences of potential USDA rulemaking on the harm to competition requirement would vary by circuit, as different circuits have to this point taken different positions on harm to competition and the weight to be given the USDA’s position. In addition to the Fifth Circuit, the Eleventh,249249

Tenth,250250 and Sixth251251 Circuits have all expressly adopted the harm to competition requirement. Precedent on harm to competition in the remaining circuits that have considered the issue is equivocal. Three other courts discussed in the Wheeler court’s opinion as supporting the requirement did not expressly endorse it.252252 Those three courts suggested a showing of harm to competition is necessary in some circumstances but not all (Fourth Circuit) or sufficient but not necessary (Eighth and Ninth Circuits).253253

PSA jurisprudence in the Fourth and Eighth Circuits is particularly unsettled because district courts in those circuits have held that the PSA does not require harm to competition. Those circuits are especially important for agriculture regulation because they include several of the top meat-producing states. Iowa (Fourth Circuit) is the nation’s top pork producer by a large margin,254254

while North Carolina (Eighth Circuit) is the top producer of poultry.255255 Uncertainty in these circuits makes it more likely they may follow a USDA interpretation advanced in rulemaking, as they may determine their experience with the statute indicates that its proper scope is a matter of policy preference ill-suited to judicial resolution.256256

The Fourth Circuit’s jurisprudence on the harm to competition requirement illustrates how decisions on the requirement that do not stake out a firm position have given rise to conflicting characterizations. The decision most often cited as endorsing the harm to competition requirement in the Fourth Circuit is Philson v. Goldsboro Milling Co.257257

In that case, the Fourth Circuit upheld a jury instruction requiring a showing of harm to competition in a claim brought by a turkey grower against his turkey dealer over incorrect weighing and low-quality birds. 258258 It cited the Eighth Circuit’s decision in Farrow v. United States Department of Agriculture259259 and concluded that the lower court accurately instructed that the Philsons needed to prove harm to competition to win their case.260260

This decision has several weaknesses as precedent for a strict harm to competition requirement. Judge John Preston Bailey of the Northern District of West Virginia noted some of these weaknesses in a 2017 decision concluding that the PSA does not require harm to competition.261261

First, the decision is unpublished and thus has no precedential value in the Fourth Circuit.262262 Second, the court did not analyze the PSA statutory interpretation question from scratch. To the extent it considered the question at all, it relied on a reading of Farrow that district courts in the Eighth Circuit subsequently rejected.263263 Third, the court’s embrace of the harm to competition requirement may apply only to the circumstances of the Philsons’ case. Incorrectly weighing a poultry grower’s birds—‌the only issue on which the jury found in favor of the Philsons—‌is a state law offense in North Carolina.264264 It is reasonable to require a special showing of competitive harm in this situation—‌where the challenged action affects only a single grower and is governed by a separate statutory scheme. Philson does not preclude treating other grower practices as per se unfair or discriminatory without a showing of harm to competition.

Subsequent interpretation of the PSA by Judge Bailey also indicates that the statute does not impose a concrete harm to competition mandate. In Judge Bailey’s 2017 decision in M&M Poultry, Inc. v. Pilgrim’s Pride Corp,265265

he denied chicken company Pilgrim’s Pride’s motion to dismiss a claim brought by growers challenging Pilgrim’s Pride’s use of the tournament system. Analyzing the plain text of the PSA and the circumstances of its passage, as well as subsequent decisions interpreting it, he concluded that the PSA does not require a showing of harm to competition.266266 He allowed the growers to pursue their claim that the tournament system is unfair in violation of the PSA without proving harm to competition.267267 In his analysis of the purpose and history of the PSA he quoted at length from Judge Garza’s Wheeler dissent.268268 This decision was unreported but left undisturbed by the Fourth Circuit, and Judge Bailey reaffirmed it in Triple R Ranch, LLC v. Pilgrim’s Pride Corp.,269269 in which growers alleged that Pilgrim’s Pride retaliated against them for participating in growers’ associations. Judge Bailey rejected Pilgrim’s Pride’s request that he revisit his decision on harm to competition in M&M,270270 pointing to that decision as the appropriate statement of the law on the question.271271

The Eighth Circuit’s PSA jurisprudence shows a similar pattern: an equivocal decision on the harm to competition requirement interpreted by a lower court as not mandating such a showing. In Farrow v. United States Department of Agriculture,272272

the Eighth Circuit affirmed an administrative decision of the USDA holding that a bid-rigging agreement by cattle buyers violated the PSA, even though the buyers showed they paid the “top, best, and fair price” for the cattle while the agreement was in place.273273 The Farrow court noted that the PSA followed the “antitrust blueprint” of the Sherman Act and other antitrust legislation,274274 and that its provisions are “liberally construed so as to give effect to the remedial purposes of the Packers and Stockyards Act.”275275 Rejecting the cattle buyers’ effort to fend off PSA liability on the grounds that they paid the ranchers a “fair” price, the court concluded: “A practice is ‘unfair’ under § 213(a) if it injures or is likely to injure competition.”276276 In its context, this statement appears as a non-exclusive definition of what the PSA prohibits: it must prohibit, at least, classic antitrust offenses such as bid-rigging. 277277

The Eighth Circuit’s 1999 decision in IBP, Inc. v. Glickman278278

also focused on the adequacy of the USDA’s showing of harm to competition, but only because the USDA based its argument against the practice it challenged on the practice’s effect on competition.279279 The court concluded that the USDA misjudged the effect of a right-of-first refusal bidding arrangement on ranchers and that the practice did not have the effect on competition the USDA claimed.280280 The decision does not mandate a harm to competition showing for all PSA claims,281281 especially since it acknowledged that undue discrimination would be a separate basis for a violation.282282

These equivocal precedents leave district courts in the Eighth Circuit free to allow growers to pursue PSA cases without proving harm to competition. In Schumacher v. Tyson Fresh Meats, Inc.,283283

Judge Charles Kornmann held that the PSA does not require harm to competition, finding Farrow and IBP do not mandate the contrary conclusion. He put his conclusion colorfully:

Defendants would have the court read Farrow as holding that a practice is unfair only if it injures or is likely to injure competition. That is simply not the law. It is akin to a statement that red is a color. This does not tell us that blue is not a color. The PSA must be broadly construed as condemning ‘any practices that inhibit the fair trading of livestock’ by those persons and entities covered under the Act.284284

284

Id. at 752 (quoting Farrow v. U.S. Dep’t of Agric., 760 F.2d 211, 214 (8th Cir. 1985)).Hide

Judge Kornmann allowed plaintiff cattlemen to pursue a PSA claim against beef packers for using inaccurate USDA-published prices to negotiate cattle prices lower than what they would have been had the cattlemen known the accurate USDA prices.285285

The ambiguous directive of Farrow and IBP remains the law; the Eighth Circuit has not stepped in to enforce a strict harm to competition requirement.286286

Farmers and ranchers are in dire straits. In reports on the state of livestock farming today, it is common to read heartbreaking stories of bankruptcy and suicide.287287

In response to complaints aired on the front page of the New York Times in December 2021, a spokeswoman for beef giant JBS responded that markets are competitive and that consolidation has nothing to do with the squeeze on farmers and ranchers.288288 There is nothing to worry about, the meatpacking executives respond. The causal connection between concentration and grower prices is perhaps a factual question; a bipartisan group of senators has called for an investigation that could help clear it up.289289

Regardless of the answer, farmers and ranchers feel their interests are not being adequately protected by their government. They are raising the kind of concerns to which Congress responded when it passed the PSA,290290

and their political mobilization has pressured members of the elected branches to take action to respond to these concerns. The current USDA efforts to enact its view of the harm to competition requirement in a rule are one such response. If these efforts are fruitful, courts should defer to that interpretation, allowing the USDA to define the bounds of the PSA’s prohibitions.

Farmers’ need for USDA rulemaking to fight the harm to competition requirement also illustrates the inadequacies of private enforcement of the PSA without USDA support. Simply put, the PSA fight shows that farmers need the strong and consistent backing of the USDA to successfully invoke the law’s protections. A rule renouncing the harm to competition requirement would be a start, allowing more farmers and ranchers to invoke the PSA against unfair practices. Abandoning the harm to competition requirement alone will not give rise to energetic enforcement of agricultural regulation, but the USDA rejecting the requirement in rulemaking could set the agency on a path to enforcing the statute effectively. For courts to retain the requirement in the face of the USDA’s opposition would enfeeble the agency.291291