Our local Sunday paper carries Alan Guebert's syndicated column on agri-business-related issues. Although my farm boy days are long behind me, his column has become a must-read for me lately because of its window into the inner workings of the government's regulatory function in BushWorld2005. Today's article outlines an impressive little feat of judicial contortion.
The article is not posted on our paper's website, but is available here:
http://www.thehawkeye.com/columns/Guebert/Guebert_0828.html.
On Aug. 16, a three-judge panel for the 11th Circuit U.S. Court of Appeals in Atlanta effectively killed the Packers and Stockyards Act of 1921, largely gutted the U.S. Department of Agriculture's mandate to "promote fair and competitive trading practices for the overall benefit of consumers and American agriculture," and gave agbiz giants permission to run U.S ag markets like wholly-owned subsidiaries.
And it was all done in the name of "efficiency," a word not found in either the PSA or the U.S. Constitution.
How in the world did a lawsuit against Tyson Fresh Meats -- where a jury in February 2004 found Tyson's use of contracted cattle cut cash cattle prices and awarded cattlemen $1.28 billion because of it -- end up granting giant meatpackers market power they could only dream of?
Simple, says Roger McEowen, an ag law professor at Iowa State University.
"The judges in this case created a standard that isn't in the Packers and Stockyards Act; a standard that says, 'The PSA exists to aid efficiency so packers can compete with each other.' "
Michael Stumo, legal counsel for the Organization for Competitive Markets who participated in the original Alabama lawsuit -- referred to as the Pickett case -- that handed Tyson a $1.28 billion lump to the head, agrees.
"The appellate court basically changed a competition enforcement statute, the PSA, into and efficiency statute." In doing so, the court said that if there is a "business justification" -- here, efficiency -- for violating the PSA, then no violation occurs.
This standard, adds Stumo, "is not in the Packers and Stockyards Act text nor it is in antitrust law. But the 11th Circuit believes it should be no matter that a jury has already said it's not and the actual law says it's not."
Guebert calls the decision (www.ca11.uscourts.gov/opinions/ops/200412137.pdf) "remarkable". I'm no legal expert so I'll have to take someone's word for it, but it at least seems to me to represent an impressive leap from the word of law to me.
"This is a very hostile opinion," says Peter Carstensen, a professor at the University of Wisconsin's law school and an antitrust specialist, "that shows a profound failure on the part of the court to understand that a legal framework is absolutely essential to make markets work."
Like McEowen and Stumo, Carstensen views the decision as a gut-splitter for PSA and its overarching USDA agency, GIPSA, the Grain Inspection, Packers and Stockyards Administration.
"This opinion basically creates a lawless market because it says that if a meatpacker's conduct is consistent with some business purpose, then anything goes -- even serfdom."
As such, the PSA is functionally dead, he says, and the "only thing that can salvage it is if someone pours a hardening agent into backbones at USDA so it stands up and writes tough rules on marketing contracts."
But, he adds, given the fact that USDA itself is largely a captive of meatpackers, "That's not going to happen."
Unfortunately, it seems unlikely there's much hope for Guebert's proposed solution:
Congress can make it happen, though, by resuscitating, then updating, the Packers and Stockyards Act in the 2007 Farm Bill.
Let's start by calling it the Anti-Serfdom Act.
I don't hold out much hope for that. This congress isn't likely to cross their big donors, and the ever-declining portion of the population directly engaged in agricultural production is unlikely to switch allegiances from the GOP, despite the Repug's alarmingly predictable propensity to stab them in the back. Even if they did, it would represent at best a one-percent vote swing. And as far as the general public pushing an issue that would result in higher beef prices in this economy... I just don't see it happening.
But the case illustrates the pronounced pro-big-business shift in the courts. Who needs business-friendly Supreme Court justices when the lower courts can be packed to the gills with them, under the radar, with no notice from the public?