Montana cattle producers must now “opt in” to have their funds used for state-specific beef promotions as the result of a June 21 court decision. U.S. District Judge Brian Morris upheld the Dec. 12, 2016 recommendations of Magistrate Judge John Johnston, and issued a temporary injunction prohibiting the Montana Beef Council (MBC) from using money collected from the $1 per head assessment to fund state-specific advertising campaigns unless the payer opts in to have funds retained in the state. Both cases were heard in the U.S. District Court of Montana, Great Falls Division.
The ruling is the result of a case filed by the Ranchers-Cattlemen’s Action Legal Fund, United Stockgrowers of America (R-CALF) claiming the federal Beef Checkoff Program in Montana violates the First Amendment of the U.S. Constitution. The December case named then USDA Secretary Tom Vilsack and the USDA as a defendant; the recent case continues to name USDA, but has been amended to reflect Sonny Perdue in his role as USDA secretary as a defendant.
In most states, money collected through the Beef Checkoff Program, as a result of the Beef Promotion and Research Act of 1985 (Beef Act), is divided evenly, with 50 cents remaining in the state and 50 cents sent to the Cattlemen’s Beef Promotion and Research Board (CBB) for use in national programs.
One argument by R-CALF is that the program in Montana fails to distinguish between domestic and foreign beef. The producer group would like MBC to promote only domestic beef. They argued that the federal Beef Checkoff Program violates the First Amendment because it forces its members to associate with the MBC, and to subsidize MBC’s private speech, with which it disagrees.
Because the MBC is a private corporation organized under the laws of Montana, its advertisements are considered private speech. The court wrote in its ruling, “The government violates the First Amendment when it compels a citizen to subsidize the private speech of a private entity without first obtaining the citizen’s ‘affirmative consent.’” The Beef Act, prohibits the Beef Board from running promotional advertisements that distinguish between domestic and foreign products.
Reacting to the court decision, Bill Bullard, CEO of R-CALF, said, “For well over a decade R-CALF USA members fought to reform what we considered a terribly mismanaged national Beef Checkoff Program. And, for well over a decade we faced an impenetrable wall of top-ranking USDA officials whose connections to the multinational meatpackers’ lobby caused them to steadfastly oppose every single reform proposal we advanced. Yesterday [June 21], after a meaningful, law-based evaluation of our concerns, we won. We hope this will be just the first step of correcting over a decade’s worth of Beef Checkoff Program mismanagement.”
David Muraskin of Public Justice, lead counsel for the plaintiff in the case, said that the District Court’s decision will “finally provide Montana ranchers leverage to control how their money is spent and their goods are advertised.” He added, “Without government accountability and control, the checkoffs amount to nothing more than a massive transfer of wealth from farmers and ranchers to multinational corporations, which is against our values and laws.”
Due to the disagreement on “generic” advertising, WLJ asked Muraskin is there would also be opposition to national advertising.
He explained, “The effect of the ruling is that those opposed to how the Montana Beef Council spends the checkoff money should not have to object to the Montana Beef Council getting their money. Rather, the Beef Board would automatically get the entire dollar unless the payer consents to the Montana Beef Council getting half.
“The reason this is so important is that there is accountability for how the Beef Board spends the money. The government is responsible for controlling and approving the Beef Board’s expenditures. Thus, while a payer might disagree with how the Beef Board spends the money, he or she has a way for his or her concerns to be heard. With the private Montana Beef Council that is not the case.”
USDA does not determine how MBC spends its money, however, it does require that money be spent to engage in promotional activities that promote beef and beef products. Additionally, MBC has to certify that it will not use any of the money it receives under the Beef Act to promote “unfair or deceptive” practices or to “influence government policy.”
WLJ contacted CBB CEO Polly Ruhland, who noted that she cannot comment on pending litigation. Asked further what the decision could mean for the future of the checkoff, she said, “Because it’s active litigation, and the outcome is unclear at this point, what it may mean to the future of checkoff programs remains to be seen.”
Ruhland added, “Rest assured, the Cattlemen’s Beef Board and the Federation of State Beef Councils will continue to successfully promote, research and educate consumers about beef in service to the profitability and sustainability of our producer investors nationwide.”
The Montana Stockgrowers Association continues to support the Beef Checkoff Program, according to Executive Vice President Errol Rice. “First and foremost, we are disappointed by the judge’s decision,” he said. “While the judge’s ruling to uphold the magistrate judge’s findings was unfortunate, we’re still waiting to see what the logistical implications will be as far as the collection process moving forward.”
Rice explained that the logistics of collection and distribution of the $1 assessment will presumably be set with guidance by USDA and possibly the CBB. He speculated that the new process will involve an affidavit that producers would need to sign indicating how they want their portion of the money handled.
Muraskin affirmed how the new procedure may work, saying, “At this point, absent the government being awarded a stay, the government does have to develop an opt-in procedure in Montana before money can go to the Montana Beef Council. Otherwise the entire $1 needs to go to the Beef Board. This is the case even without a permanent injunction.”
Whether or not this ruling will set a precedent for similar cases in other states, Muraskin told WLJ, “the district court’s ruling explains that for the Beef Checkoff Program to be constitutional either there must be government control over how the money is spent or the payers must consent to the expenditures. To the extent other beef councils are not governmentally controlled and are automatically receiving money under the checkoff, the ruling would suggest that is unconstitutional. If that is true, we hope the government will acknowledge the logic of the district court’s opinion and, when it implements the district court’s order, work to protect all ranchers’ rights; not just those in Montana who were the focus of this suit.”
The court order is effective immediately, but Muraskin noted there is typically a reasonable amount of time for the government to act. He explained that the government could also chose to appeal and try to challenge the order before the U.S. Court of Appeals for the Ninth Circuit. “If it appealed, it would have to seek a stay of the order or the order would remain in effect even during the appeal,” Muraskin said.
The case now goes back to the magistrate judge with the preliminary injunction in place where there could be another hearing and more motions, according to Muraskin.
Rice told WLJ, “If the judge ultimately decides that changes are necessary, then we are eager to roll up our sleeves and go to work and make sure that we can still have a strong checkoff program moving forward.”
