WASHINGTON, D.C. – Senator Pat Roberts (R-Kan.), Ranking Member of the Senate Committee on Agriculture, Nutrition and Forestry, sent a letter this week to Cass Sunstein, administrator of the Office of Management and Budget’s (OMB’s) Office of Information and Regulatory Affairs, asking him to commit to reviewing the U.S. Department of Agriculture’s proposed Grain Inspection, Packers and Stockyards Administration (GIPSA) livestock marketing rule. The letter sent this week is a follow-up to a letter Sen. Roberts sent exactly one-year ago, requesting a review of the GIPSA rule and its impact on the livestock industry.

“It’s been more than a year since I’ve asked Mr. Sunstein to properly review the GIPSA rule and its effect on the livestock industry. I’m committed to ensuring the livestock sector receives answers about how this proposed regulation will adversely affect livestock marketing in the United States,” said Roberts. “The livestock sector is a driving force of the agricultural economy. If the president plans to double exports, this segment of agriculture stands ready to deliver. However, this cannot happen as long as producers are continually attacked with unnecessary regulations that could cost them hundreds of millions, if not billions, of dollars. This review should have happened long ago, and I intend on holding Secretary Vilsack, Mr. Sunstein and OMB accountable.”

In the letter, Roberts points out that such a review is required because of USDA’s own findings and recent declaration that the GIPSA rule has been designated as an “economically significant” regulation, meaning that it would have an impact of more than $100 million on the economy. This designation triggers a compulsory OMB cost-benefit analysis.

Roberts also requested that OMB review how this regulation produced by GIPSA will impact small businesses.

Both the initial and on-going costs to the livestock sector are expected to cost more than $100 million, and annual indirect losses to the industry and overall economy could exceed $1 billion.

Complete text of the letter is below:

Dear Administrator Sunstein:

Once again I call your attention to the proposed livestock marketing rule published in the Federal Register on June 22, 2010, by the U.S. Department of Agriculture (USDA), through the Grain Inspection, Packers and Stockyards Administration (GIPSA). As you know, this rule has raised significant concerns within the livestock industry prompting over 60,000 comments provided to USDA. Beyond the substance of the rule, the process under which it was published was alarming. Unfortunately, despite the rule’s far-reaching implications, neither USDA nor your office examined the costs or benefits of the measure to industry participants, the marketplace or consumers before the rule was proposed. A thorough review of the costs and benefits to all is necessary for the Administration, the Congress and the public to understand the impacts of USDA’s proposal.

As asserted in my July 26, 2010 letter to you, I have been concerned from the beginning that USDA has grossly underestimated the potential costs of its proposal on consumers and producers. According to GIPSA’s previous work, the impact of the proposed changes over ten years could be quite significant. Specifically, in its 2007 Livestock and Meat Marketing Study, GIPSA found that a modest 25 percent reduction in the use of alternative marketing arrangements (AMAs) would cost cattle producers $9 billion and consumers $2.5 billion. If these AMAs were eliminated, the cost to consumers over 10 years would be $13.7 billion. Additionally, the costs at the farm gate would be tremendous – with cattle producers losing $52 billion. Many in the livestock industry believe GIPSA’s proposed rule will lead to a decrease in the use of AMAs thereby risking significant industry gains over the last couple of decades.

After receiving comments indicating that both the initial and on-going costs to the livestock sector would each exceed $100 million, and that annual indirect losses to the industry and overall economy would easily exceed $1 billion, it is now my understanding that USDA is in the process of conducting an economic analysis of the proposed rule. In addition, USDA Chief Economist Joe Glauber recently testified in a June 28, 2011 hearing before the U.S. Senate Committee on Agriculture, Nutrition and Forestry that USDA would be newly designating its GIPSA proposal as an “economically significant” rule. This should have been done a long time ago.

In light of USDA’s own findings and recent designation of its proposal as economically significant, I write seeking your confirmation that under Executive Order 12866 such a designation triggers a compulsory cost-benefit analysis – and that OIRA will comply with such requirements regarding the proposed GIPSA rule. Further, I write to confirm that your office will also comply with the requirements of the Regulatory Flexibility Act, including Executive Order 13272, which mandate an evaluation of the costs of this regulation on small business.

Thank you for your attention to this important matter. I look forward to receiving your response.

Sincerely,

Pat Roberts

Ranking Member

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