Why Is a Corruption Watchdog Doing Corporations' Dirty Work Going After an Obscure USDA Official?


The problem of money in politics is simple -- those with more resources too often have a stronger voice in the democratic process, regardless of the merits of their position. Watchdog organizations exist to uncover those who would use wealth to improperly influence politics. One such organization, Citizens for Responsibility and Ethics in Washington, has an admirable record of exposing corrupt members of Congress, but in recent months, CREW has for a second time sided with corporate interests and intervened in policy questions where no evidence of corruption can be found.

In October, the American Prospectreported on CREW's criticism of student-loan reform advocates. CREW's position was based on talking points disseminated by the for-profit education industry and relied on biased sources, including lobbyists later hired by the education industry.

CREW's own executive director, Melanie Sloan, was hired by one of those lobbyists, Lanny Davis, in November, to begin work this month. Before Sloan's departure from the organization, CREW asked a federal official to step down from his central duty, once again echoing the arguments of lobbyists for a major industry -- this time, the largest meatpackers in the country.

Earlier this year, J. Dudley Butler, the director of the Grain Inspection, Packers and Stockyards Administration (GIPSA), a division of the Department of Agriculture, announced new rules designed to increase competition and give independent farmers the ability to challenge potentially monopolistic practices in the meatpacking industry.

The 1921 Packers & Stockyard Act gave the Department of Agriculture authority to regulate the meatpacking industry. Without clear rules for implementation, the Act has since been subject to judicial interpretation: A precedent set during the George W. Bush administration made it nearly impossible for independent producers to sue meatpackers, because they must show "industry-wide damage" -- a very difficult standard.

In 2008, Congress passed a farm bill that included a provision instructing GIPSA to more clearly define the criteria used in enforcing the Packers & Stockyard Act, such as what constitutes "undue or unreasonable preference or advantage." GIPSA, under Butler's leadership, published draft rules for public comment in June 2010.

"Butler is the first administrator of the GIPSA to issue rules about how to implement the Packers and Stockyards Act in the nearly 90-year history of the act," says Robert Taylor, a professor of agricultural economics at Auburn University in Alabama who advises family farmers. "He is the first head of GIPSA to actually enforce the law to do what it was intended to do -- promote competition in the marketplace."

Before joining the USDA in 2009, Butler worked for 30 years as a lawyer, often representing family farmers across the United States in arbitration proceedings. "Butler is to family farmers what Elizabeth Warren is to consumer advocates," says rancher Bill Bullard, chair of the family-farmer organization R-CALF.

R-CALF and organizations like it say current rules allow the "Big Four" companies, which control more than 80 percent of the U.S. meat market, to set prices and therefore pay more to the farms with which they contract and less to smaller independent producers. The Department of Justice has ongoing antitrust investigations into these practices.

"Only the big farmers owned through contract by their conglomerates can even play the game," says Fred Stokes, a rancher from Mississippi who serves as executive director of the Organization for Competitive Markets (OCM). According to the USDA's Economic Research Service, the number of farms in the U.S. has plummeted in the past 20 years, with hundreds of thousands of family farms closing due to economic pressure.

Yet CREW argues that Butler's experience should make him ineligible to work on these issues. Sloan wrote a letter in November to USDA Acting General Counsel Steven Silverman asking that Butler be removed from the rule-making process, even as she acknowledged that Butler was not in violation of any regulation governing conflict of interest or lobbying. Sloan cited the perception that the new rules could benefit other plaintiff's lawyers and perhaps Butler himself in the future. Further, Sloan demanded that GIPSA reopen the rule-making process -- a key demand of the meatpacking industry, which hopes to delay implementation of the new rules.

In a separate statement, CREW expanded upon the claims made in the letter to Silverman, citing an article about Butler from Beef magazine, a publication funded by the meatpacking industry, and an op-ed by former Rep. Bob Barr, a lawyer and lobbyist who represents a meatpacker. As with its intervention in the student-loan dispute, CREW relied on sources with an interest in minimizing new regulation.

In a speech to OCM in August 2009, Butler described the current statutes as a "plaintiff lawyer's dream." The comment was reported in Beef magazine as evidence Butler was using his government position to favor trial lawyers -- a fear Sloan echoed when she repeated the quotations in her letter to Silverman. Sloan didn't note that Steve Kay, who wrote about the speech for Beef, has a conflict of his own -- Kay, also the editor of Cattle Buyer's Weekly, provides consulting services to the livestock industry. Stokes, who was present for the speech, says Butler meant exactly the opposite of how the comment was spun.

"[The article] purposely ignored Butler's contrast between conditions as they presently exist in the marketplace, which Butler said creates such uncertainty as to be 'a lawyer’s dream, a plaintiff lawyer's dream,' and how those conditions could be corrected with a rule that removes uncertainty by defining the perimeters of unlawful livestock procurement practices -- which, obviously, would significantly reduce the potential for litigation," Stokes says. A complete recording expand=1] of the remark, placed online by Stokes' organization, supports that interpretation.

The op-ed by former Congressman Barr, a Republican from Georgia, also quoted Beef to argue that Butler was attempting to use agricultural regulation to enrich trial lawyers. Barr's arguments were picked up by right-wing bloggers to attack the new rules, but Barr did not reveal his own conflict of interest: He currently represents Sholom Rubashkin, whose now-defunct firm, Agriprocessors, came under GIPSA scrutiny after it failed to pay farmers. Rubashkin received a 27-year sentence after being convicted of bank fraud while managing Agriprocessors. When contacted, Barr's firm said the former congressman had been retained by Rubashkin to assist in post-conviction matters.

"If groups have to trump up evidence of Butler's bias by distorting what he said, or turn to internet slumdogs to get their point across, then they have failed in making their argument," respected agriculture reporter Chris Clayton wrote of the episode.

Acting USDA General Counsel Silverman responded to CREW's letter, explaining that the regulations were intended to limit legal uncertainty, not create opportunities for lawsuits. A group of 25 major family-farm organizations in the United States also sent an open letter to CREW’s board asking it to change its position.

"Many of the statements made by CREW in its letter to USDA's General Counsel are misleading or demonstrably false and we urge an immediate retraction," the letter reads. "Moreover, many of CREW's allegations and even language are disturbingly similar to changes leveled by the meatpacker, hog processor and poultry industry. […] When CREW adopts the language, rhetoric and tactics of a special interest group in the guise of objective and non-partisan disclosure it belittles the efforts of all good-government groups."

Representatives of CREW refused to comment for this article, citing objections to the Prospect's previous coverage of potential conflicts of interest at the organization. CREW will not say whether it consulted with independent experts on agricultural regulatory issues, and, because CREW does not reveal its funders, whether the organization has a financial conflict of interest.

Once again, CREW has intervened in a high-stakes policy dispute, on the side of large corporations that benefit from the status quo. The organization has called for a federal official to remove himself from the rule-making process at the heart of his job based on an out-of-context quotation and arguments from industry advocates and lobbyists with their own conflicts of interest. It seems far removed from the organization's mission, and raises even more complicated questions about how the voices of the already powerful gain influence in Washington.

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