Climate Ruling Offers Opening to Challenge USDA Antitrust Role

The Senate’s top agriculture Republican is challenging the Biden administration’s authority to impose new rules on chicken farmers in his home state, and looking to a recent Supreme Court decision to buttress his case.

Proposed regulations to boost competition in the meat and poultry industries “arguably carry substantial economic and political consequences,” Sen. John Boozman (R-Ark.) wrote Agriculture Secretary Tom Vilsack, asking whether the department was reviewing its authority. Boozman cited the recent West Virginia v. EPA decision that struck down clean power rules as contrary to the major questions doctrine, with conservative justices arguing that agencies must get authorization from Congress if they tackle questions of vast “economic or political significance.”

“Although the decision concerned EPA, it will have significant implications for government-wide rulemaking efforts moving forward, including USDA,” Boozman said in his letter this month.

Boozman’s salvo could spell trouble for the Department of Agriculture as it tries to drive climate-conscious farming and competition in the meat industry. The broader question about regulatory authority sets the table for debate next year as lawmakers draft sweeping legislation authorizing farm programs.

It’s also a warning shot from Boozman, who’s in line to become the next chair of the Committee on Agriculture, Nutrition, and Forestry should his party win control of the Senate in the midterm elections. His state of Arkansas is home to the largest chicken producer in the country, Tyson Foods Inc.

Luke Sharrett/Bloomberg via Getty Images

A semi trailer sits at a Tyson Foods Inc. plant in Union City, Tenn. on Feb. 16, 2022.

An Agriculture Department spokesperson said the USDA is drafting a response to Boozman’s letter, but declined to provide more details.

Beyond the USDA’s proposed meat antitrust regulations, the new precedent could affect other controversial rulemaking at the agency. For example, the department’s plans to mitigate climate change through rules for farmers to reduce carbon emissions could be in jeopardy — along with the Biden administration’s promise to introduce more climate-conscious policies across other agencies.

Read More: Justices Cement ‘Major Questions’ as Test for Sweeping Rules

Meat, Poultry Competition

Legislation could come soon challenging USDA regulations, said University of Wisconsin-Madison law professor emeritus Peter Carstensen. As for the meat and poultry rules, “right now, that’s where all the action is,” he said.

The Agriculture Department announced proposed poultry regulations in late May, amid allegations of anticompetitive behavior by a few dominant corporations — something all the major meatpackers have denied. The poultry rules seek to boost transparency for chicken farmers, and are open for comments until Aug. 8.

Currently, chicken farmers must compete against each other, with their compensation determined by how they measure up. The proposed rules would require chicken processors to provide growers with more information about how they’re ranked, with the aim of making it easier for the farmers to compete.

Read More: Biden Moves to Level the Playing Field for US Chicken Farmers

“For far too long, growers have complained that the ‘tournament’ system is ripe for abuse,” the department said in a press release at the time, adding that the announcement was the first of three new rulemakings aimed at boosting competition for meat and poultry.

The proposed rules are part of the Biden administration’s executive order last year aimed at boosting competition in the economy. The White House specifically cited the meat industry as one area needing an antitrust overhaul.

Congressional, Court Scrutiny

Sarah Little, a spokesperson for the North American Meat Institute, a trade group that opposes the meat industry regulation, said the rules proposed by the Biden administration are similar to ones Congress blocked in past appropriations bills, and which federal appellate circuits have rejected.

“These proposed regulations are counter to the major questions doctrine and the Ranking Member was right to caution Secretary Vilsack,” she said.

But Carstensen, from the University of Wisconsin, said the case for challenging the Agriculture Department’s meat and poultry rules is “much weaker” than the argument against the Environmental Protection Agency’s climate change rules. This is mainly because the Packers and Stockyards Act of 1921 is “really very much directed to protecting farmers in poultry, pork, beef from being exploited,” he said — and there is a clear link between increasing industry competition and helping producers.

Additionally, the key federal antitrust enforcers are the Department of Justice and the Federal Trade Commission. Because the EPA case doesn’t directly relate to Justice Department enforcement, Penn State law professor John Lopatka said he doesn’t expect that decision to have a huge impact on agricultural antitrust efforts.

But the court could still apply the same major questions doctrine from the EPA case to a similar one involving the USDA.

“The major questions doctrine that the court applied in the EPA case can apply to any agency,” George Washington University law professor Richard Pierce said in an email. The doctrine stops “any agency from relying on an old broadly worded statute as the basis for an unprecedented action that has a major economic or political effect,” he said.

Farm Bill Fallout

Questions about USDA’s regulatory authority could affect how lawmakers draft the 2023 Farm Bill, a congressional aide familiar with Boozman’s letter said.

Previous farm bills have included language indicating that the Agriculture secretary “shall promulgate regulations” in some but not all sections, the aide said, because there’s been an assumption that the department has the authority to put in place rules to that end.

Though the aide cautioned much is still unknown about how the decision could affect the farm bill, the legislation could require lawmakers to more clearly authorize the USDA to make those rules than they have in the past. That could add a step to the process of drafting the legislation — which already is likely to need an extension beyond its expiration on Sept. 30, 2023, as many farm bills have.

Boozman requested in his letter that the Agriculture Department help Congress develop “statutory language that clearly establishes USDA’s authority to craft and issue implementing regulations” for the 2023 Farm Bill.

‘Ripple Effect’

In a nutshell, Philip Wallach, a senior fellow at the right-of-center American Enterprise Institute, said the West Virginia v. EPA decision puts members of Congress on notice that they must decide how agencies regulate.

Agencies such as the USDA will still be able to make rules based on authorization from Congress, Wallach said, but lawmakers “just have to take some care with their language.”

Lawmakers appeared prepared for the Supreme Court ruling to affect regulations across agencies. Chuck Grassley (Iowa), a key Republican on the Senate Agriculture Committee, said the decision is “going to have a ripple effect through all regulation writing throughout the administration, Republican or Democrat in the future. ”

Though Grassley wouldn’t comment specifically on the letter from Boozman, he said West Virginia v. EPA will “very massively” affect rulemaking at the USDA because “every regulation is written by the US Department of Agriculture, they better show a specific place in law where they have the authority to write that regulation.”

Asked about the affect on USDA rulemaking, Sen. Debbie Stabenow (D-Mich.), the chairwoman of the agriculture committee, said in a hallway interview that she isn’t supportive of the West Virginia v. EPA decision. Going into the farm bill, she said “we’ll have to take a look at” what Secretary Vilsack thinks with regard to rulemaking authority and language.

To contact the reporter on this story: Maeve Sheehey in Washington at msheehey@bloombergindustry.com

To contact the editors responsible for this story: Robin Meszoly at rmeszoly@bgov.com; Anna Yukhananov at ayukhananov@bloombergindustry.com