Checkoff ruling possible by early April

Cattle Market & Farm Reports, Editorials
Mar 14, 2005
by WLJ
The fate of the U.S. beef checkoff program could be known by the end of March or first week of April, according to sources from both sides of constitutionality lawsuit.
The U.S. Supreme Court could issue its decision in the case during its next set of dates set aside for announcing decisions from cases argued in late 2004. The next decisions from the court are scheduled to be announced on March 22, 23, 29, 30 and April 4.
John McBride, director of information for the Livestock Marketing Association (LMA), said it has been indicated to officials with his group that a large majority of the decisions from cases argued in front of the Supreme Court in November have already had the decisions published.
“Our checkoff arguments were heard Dec. 8, which means the program’s unconstitutionality should be among the decisions announced by the court this next go around,” said McBride.
Defendants in the case—USDA, the Cattlemen’s Beef Board and Nebraska Cattlemen, Inc.—have argued that the checkoff program is protected as “government speech,” loosely defined by court cases as the government’s ability to express a point of view.
In addition, they argue that the benefits of the program have been far-reaching across the U.S. beef industry, and that cattle producers will lose those benefits if the program is scrapped.
In addition, the plaintiffs have had a major complaint about the way the legal proceedings have moved ahead since an original compliance complaint was modified into the current challenge of the program’s constitutionality.
Sources with USDA and the Department of Justice, who filed the original request with the Supreme Court, have indicated that federal Judge Charles Kornmann, District of South Dakota, overstepped his authority when he asked plaintiffs to amend their suit to include asking for a ruling on the program’s constitutionality.
LMA contends the checkoff is not protected as government speech because it isn’t a federally funded program.
“The beef promotion program is funded not from Congressional appropriations, but by mandatory payments that all members of the beef industry must make to their respective state beef industry associations,” LMA said in filed briefs.
“The Supreme Court has never recognized a government speech defense, unless the speech in question was funded by taxpayers. Furthermore, the program is not government speech because the government’s control over the program is minimal. USDA loosely oversees compliance with the program’s conditions, but it does not initiate, create, devise, compose, fund or implement any of the board’s activities.”
In addition, LMA said the checkoff is unconstitutional because it forces people to fund and be affiliated with advertising and promotions that they may not be in favor of or that promotes a “commodity product” when they produce a better quality product. Some producers have said advertisements funded by the checkoff program hurt their businesses rather than promote it.
The First Amendment prohibits government from preventing free speech, but the Justices will have to consider if the First Amendment also prevents the government from compelling speech with which federally-mandated contributors may disagree.
A total of seven amicus, or “friend of the court,” briefs representing 70-plus organizations were filed alongside LMA’s briefs with the Supreme Court on Oct. 15.
The suit was initiated in 1997 when LMA tried to force a referendum to re-authorize the program. However, in the middle of that process, Kornmann asked the plaintiffs to amend their complaint into a constitutional challenge, which they did. In June 2002, Kornmann ruled in favor of the plaintiffs citing the “compelled speech” argument. An appeal to the Eighth Circuit Court of Appeals wound up with a three-judge panel upholding Kornmann’s decision in October 2003. The same appeals court was asked to rehear the case, but refused, and that resulted in the Department of Justice, on behalf of USDA, CBB and Nebraska Cattlemen, filing a hearing request with the Supreme Court.
If the program is deemed unconstitutional, there is protocol in place by which funding granted and implemented for fiscal year 2005 will remain in place until completed. Any non-implemented programs will be disbanded. Any remaining funds will not be refunded to producers, according to administrators of the program.
If disbanded, between $85-90 million a year will be lost in promoting beef to U.S. consumers, USDA statisticians said.
According to the Beef Research and Promotion Order, if the court rules the program unconstitutional, up to 11 trustees of the checkoff board of directors will be retained and continue to pay any outstanding funds to programs approved prior to the checkoff’s termination.
Any money that is not used to fund previously approved programs will not be reallocated back to producers assessed checkoff funds, the order added.
Diane Henderson, communications director for the Cattlemen’s Beef Board, has said it would be almost impossible to refund money to producers because of the number of people that would entail, and there would be no fair way to prorate how much of the money would be given back to each producer.
“There is absolutely nothing in place to refund the money,” she said. “It would be very hard to do so, and would be a major nightmare.”