July 30, 2021
The U.S. 9th Circuit Court of Appeals reaffirmed the constitutionality of the beef checkoff program in a challenge brought by the Ranchers-Cattlemen Action Legal Fund.
In 2020, a federal court ruled that the qualified state beef checkoff programs operating under a Memorandum of Understanding with the UDSA do not violate the First Amendment and dismissed the lawsuit brought by R-CALF. In the suit, R-CALF USA alleged the use of industry assessments collected by state beef councils for advertising and promotional materials violated the First Amendment rights of beef producers. The Court found that speech by Montana Beef Council and other qualified state beef councils, operating under the MOU with USDA, is government speech.
“The Ninth Circuit Court of Appeals awarded USDA and several Qualified State Beef Councils (QSBCs) with a long-awaited victory,” says Colin Woodall, CEO of the National Cattlemen’s Beef Association. “A three-judge panel rejected R-CALF’s argument that the work of QSBCs wasn’t receiving adequate government oversight, finding that the government speech of QSBCs and their contractors is properly overseen by USDA.”
The MOUs grant the USDA secretary pre-approval authority over “any and all promotion, advertising, research, and consumer information plans and projects.” The secretary also reviews and approves the QSBCs’ budgets and marketing plans, which detail their anticipated expenses and disbursements, and government officials can participate in QSBC board meetings at which promotional and funding decisions are made. The MOUs allow the secretary to decertify a noncompliant QSBC, thereby terminating its access to checkoff funds.
The agreements with qualified state beef councils, include Colorado, Florida, Hawaii, Indiana, Kansas, Maryland, Montana, Nebraska, Nevada, New York, North Carolina, Oklahoma, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Vermont, Virginia, and Wisconsin.
During the initial preliminary injunction, Montana beef producers were required to complete a producer consent to fund the Montana Beef Council. After the 2020 ruling, as part of the MOU with USDA, the Montana Beef Council could resume retaining fifty cents of each checkoff dollar collected in Montana to be used for beef promotion, research and education under the guidance of the Montana Beef Council Board of Directors.
Bill Bullard, R-CALF CEO, says the organization set out over five years ago to reform the beef checkoff program. “We were concerned it was being operated contrary to the U.S. Constitution. The district court agreed that our concern had merit and granted us a preliminary injunction. In response, the USDA instituted new measures to correct its constitutional violation,” Bullard says.
USDA entered contracts or MOUs with the various state beef checkoff councils that granted USDA authority over each of the council’s messages (or speech). The lower court determined this new initiative satisfied the constitutional violation and R-CALF’s case was dismissed.
“We appealed on the narrow argument that the MOUs were insufficient, but the Ninth Circuit disagreed and affirmed that the MOUs satisfied the Constitution,” Bullard says. “Though we are obviously disappointed with this final ruling, we did, in fact, successfully reform the beef checkoff program through our lawsuit by making it accountable (through government oversight), to the cattle producers mandated to pay into it.
“So, though we are disappointed in this final outcome, our case did force the reform of the national beef checkoff program,” Bullard adds. “The case established that the beef checkoff program operated for decades in violation of the Constitution and the Secretary of Agriculture then took steps to correct the violation by asserting more governmental controls over the speech of the various state beef checkoff councils.”
Woodall notes this decision ends a legal battle that has spanned more than six years and exhausted significant checkoff and industry resources. “We are pleased this battle is now behind us and we remain thankful for the volunteer cattle and beef industry leaders and staff, at both the state and national level, who work tirelessly to promote beef and ensure the markets for beef and cattle continue to grow.”
Bullard says R-CALF has a separate lawsuit filed in the federal district court for the District of Columbia in which the organization alleges the USDA did not have the authority to enter the MOUs because the agency did not first conduct a public notice and comment period. That case is still pending, Bullard notes.
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