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NEBRASKA: Three brand bills to be heard by legislature

By Spike Jordan for Tri-State Livestock News

LINCOLN, Neb. — Three bills related to Nebraska’s brand law are set to be heard by the legislature’s Agriculture Committee on the afternoon of Feb. 9. Because of COVID restrictions, testimony on the bills can be offered in several ways, (see the end of the article for details).

Two of the bills, LB 571 and LB 572 were introduced by Sen. Steve Halloran, who chairs the legislature’s agriculture committee. His legislation comes on the heels of the impasse with the two brand bills heard by his committee last spring.

With that experience fresh in his mind, Halloran hosted the LR 378 interim study and invited industry stakeholders to weigh in over the course of four meetings last fall. Halloran’s intention behind LR 378 was reaching a consensus with the stakeholders, which could provide solutions to the litigation and legislation that’s been directed at the Nebraska Brand Committee in recent years. Halloran’s bills are, in-part, a product of those meetings.



LB 614 was introduced by Sen. Steve Erdman of Bayard. Erdman attended the third LR 378 meeting in North Platte in November, where he observed the disputes over registered feed lot fees.

LB 571



This bill resurrects the concept of “registered backgrounder lots,” an idea that was first floated in LB 1200 introduced by Sen. Tom Brewer of Gordon last spring on behalf of the brand committee.

A backgrounder lot, (also known as a growyard), is an intermediate facility where weaned cattle are “backgrounded” or grown to weight until those cattle are ready to either enter a feedlot for finishing, or be turned back out on grass.

LB 571 would provide a provision for backgrounder facilities to apply for a permit similar to a registered feedlot (RFL) program. LB 1200 contained a requirement that 100 percent of the cattle in a registered backgrounder lot be owned by the RFL they are destined for, (a requirement that is still intact in LB 572). However, Nebraska Cattlemen objected to the 100 percent ownership requirement in LB 572, as some of its membership voiced concerns that the requirement promotes “vertical integration.”

“We had not heard from as many members last year because of the timing [when LB 1200 was introduced],” Melody Benjamin, Nebraska Cattlemen vice president of member services, said in a text message Wednesday. “As people digested it we have been hearing many felt that it promoted vertical integration. Putting all of the power into the hands of RFLs.”

During the working group discussions, the Nebraska Beef Producers Committee, a group representing several of the state’s larger RFLs, had also opposed the 100 percent ownership provision because they often affiliate with lots that background cattle for multiple owners.

As a potential solution to the “multiple owners” problem, LB 571 contains certain requirements before a backgrounder can participate in the registered backgrounder lot program. The first is permanent fencing constructed in a way that prevents cattle from the outside getting into the lot, and cattle inside the lot from escaping, as well as internal fencing to lower the potential for intermingling between different pens of cattle with different owners.

The permit application fee for a registered backgrounder lot would be set at $50, and within 30 days of receiving the application, a representative of the brand committee would visit the facility to inspect it to ensure it meets the required fencing standards. The fees for registered backgrounder lots would be based on the max one-time capacity of a background lot, (similar to RFLs) but would be assessed at 10 percent of the per-head inspection fee rounded up to the nearest thousand head. (So, for a 1,000 head backgrounder lot at 10 cents/head, the fee would be $100 annually).

Registered backgrounder lots would then fill out shipping affidavits similar to those used by RFLs in order to comply with the brand inspection requirements. Cattle not destined for finishing at a feedlot would need to be physically brand inspected.

While the bill outlines a number of scenarios giving brand committee employees authority to inspect cattle at registered backgrounder lots and registered feedlots and to terminate the permit for non-compliance, it also contains significant changes to the “54-1,122 exemption,” that are worrisome to some of the stakeholders.

The 54-1,122 exemption is the subject of ongoing litigation between Adams Land and Cattle Company and the Nebraska Brand Committee. In short, Section 54-1,122 of the current Brand Act exempts cattle from inspection if purchased in a state with brand inspection and shipped from the point of origin directly to an RFL. So long as the original brand clearance is kept with those cattle, they do not need to be reinspected upon arrival at the RFL.

In 2009, Adams entered into an agreement with the brand committee which extended that exemption in order to move cattle from the point of origin to a backgrounder lot first. Cattle could then be moved from a backgrounder lot to an RFL without undergoing another physical brand inspection. However, the Nebraska Brand Committee now argues that it did not have the statutory authority to extend that exemption to backgrounder lots, and has requested that Adams submit its cattle for physical brand inspection before entering the RFL, hence the lawsuit.

LB 571 contains language that would amend the 54-1,122 exemption to include Registered Backgrounder Lots, and to what degree that exemption would void the lawsuit is unclear.

However, if passed the amended exemption could potentially provide a pipeline for cattle to come through the brand inspection area without being physically inspected to verify ownership.

For example it could create problems for non-RFL customers in backgrounder lots where cattle could potentially intermingle with cattle belonging to RFL customers (and vice versa). While RFL cattle mingled with non-RFL customers would be caught by the brand inspector at a salebarn, without cattle being inspected going into an RFL, recovering a non-RFL customer’s stray cattle from the RFL would be a headache for Brand Committee Investigators.

Going through an RFL to recover a stray could prove to be costly for the feedlot staff in terms of man hours. And if the stray is located in a large pen of cattle, the per-head inspection fee required to identify and recover that stray could prove costly for the non-RFL customer seeking the recovery.

Nebraska Cattlemen are expected to support LB 571 because it removes the 100 percent ownership requirement contained in LB 572. Nebraska Beef Producers Committee members would likely welcome the removal of the 100 percent ownership issue, and amending the section 54-1,122 exemption, but would have reservations due to the physical inspection provisions intended for stray recovery.

Nebraska Farm Bureau does not have member policy that coincides with the provisions of LB 571 and has not taken a position. The Brand Committee is expected to testify against LB 571 due to the numerous potential loopholes in the bill. Independent Cattlemen of Nebraska (ICON) is expected to oppose the bill on similar grounds.

Because of these stakeholder disputes, it remains uncertain if the bill will even advance from committee.

LB 572

As mentioned above, LB 572 is largely the successor to the brand committee’s LB 1200, which was introduced last session.

It defines several terms, including approved non-visual identifier, audit, backgrounder, certified bill of sale, certified transportation permit, electronic inspection, enrollment, permanently fenced, physical inspection; qualified dairy.

Like LB 1200, LB 572 provides for the voluntary use of “non-visual identifiers,” such as Electronic Identification (EID) tags, noseprints, retinal scans, DNA, etc. However, unlike LB 1200, this bill contains provisions that require non-visual forms of ID to undergo a public hearing process prior to approval for use by the brand committee. The brand committee is required to also consider the degree that the proposed method is susceptible to error, retention, fault, fraud, and tampering before approval.

However, any forms of non-visual ID must be “equal to or superior to” the visual means of identification (such as hot iron and freeze brands). Some working group members have rightfully objected to the wording of “superior to,” as they consider physical brands as the ultimate and prima facie proof of ownership. A possible forthcoming amendment to the bill may remove that language.

It also provides provisions for cattle to be enrolled under an “E-inspection” program, which could be a potentially less costly alternative to physical brand inspection that would not necessarily require a brand inspector present for cattle to verify the ownership of cattle that are pre-enrolled in the system.

E-Inspection is a potential solution for concerns voiced by the dairy industry, especially when it comes to biosecurity. Brand inspectors visiting a dairy to perform a brand inspection could inadvertently introduce an outside disease from another feedlot or facility they’ve inspected. Dairy producers no longer brand their cattle, but instead use EID tags to track production data from their dairy cows, and an E-inspection could provide a perfection to the proof of ownership requirement and alleviate the need for physical inspection of their “slick” (unbranded) dairy cattle.

If passed, LB 572 would include a strong endorsement for E-inspection from the Legislature, and require the brand committee to deliver a report to the agriculture committee by Dec. 21, 2021, informing the ag committee about the program progress. However, while EID use is voluntary, some remain skeptical about the practice, which may draw opposition from some testifiers.

LB 572 allows for a $200 citation for brand law violations to be issued by “Peace Officers,” which would include Nebraska State Patrol, County Sherrifs, Local Police, and the Committee’s four law-enforcement certified Brand Investigators. These citations would provide for a court summons, however those cited could waive a hearing and pay the fine.

Current annual RFL inspection fees are tied to the per/head inspection fee times the average one-time capacity of the lot, (a 1,000 head RFL pays $100). LB 572 changes the fee structure for RFLs from the per/head inspection rate to an “audit fee” of 50 percent of the current per/head fee times the average one-time capacity of the RFL rounded up to the nearest 1,000 head, (for example a 1,000 head RFL would pay $50 annually under the current $1/head fee). The registration and permit renewal fee would be set at $250.

The Beef Producers requested that the fee be 10 percent of the current per/head fee, (for a 1,000 head RFL, it would be dropped to $10 annually).

Another concern raised by some stakeholders in the RFL sector is that they’d prefer the fee be based on average daily use, versus average one-time capacity. Since the start of the pandemic, the average daily use for RFLs has dropped significantly below the average one-time capacity (in some cases to about 89 percent of average capacity), which could provide distortion to how the audit fee is applied.

The final changes in LB 572 deal with the fee schedule and are as follows:

Physical Brand Inspection is reduced from $1/hd to $0.95/hd until June 30, 2023. Beginning July 1, 2023, fee set by Brand Committee not to exceed $1.50/hd. The $20 surcharge for travel will change to a mileage charge, and a $50 late notification fee will be assessed for giving less than 48-hour notice for a request for inspection, (bringing to mind the idiom “A failure to plan on your part does not necessitate an emergency on mine.”).

Electronic Inspection is initially set at $0.95/hd until June 30, 2023. Beginning July 1, 2023, fee set by Brand Committee not to exceed $1.50 / hd. However, that fee may be adjusted if and when the program becomes operational.

Current new brand applications are $100, which will increase to a statutory maximum of $150, with a research fee not to exceed $50.

Current brand renewals are every 4 years at a rate of $50 with a late renewal fee of $5 per month. It will increase to a statutory maximum of $200, (essentially, $50 annual), with a $5 per month late fee and a research fee not to exceed $50.

The duplicate brand & other documents will remain at $1 / page, however the max research fee will increase from $20 to $40.

It is anticipated that the temporary reduction of the physical inspection fee to $0.95 / hd through June 30, 2021 from the current $1/hd plus reduced registered feedlot fees would gradually reduce the Brand Committee’s carryover balance, which stood at $2.97 million on June 30, 2020.

Loss of revenue from reducing these fees could be somewhat offset by authority to increase brand recording and renewal fees and collection of actual mileage instead of statutory set travel surcharge. It is intentional that the fee revisions would reduce the carryover balance to between $1 million and $1.5 million over the next two to three years.

However, the fee structure will likely be adjusted with an amendment due to the governor’s budget recommendation for the FY 21-23 biennium. The brand committee requested increased spending authority to pay for personnel (hiring more brand inspectors) and technology projects (electronic ID), however the governor has shot down that requested increase, and it remains unclear if the Legislature’s Appropriations Committee will grant the brand committee with it’s requested budget, or if it will approve the governor’s proposed appropriation.

The Nebraska Brand Committee and Nebraska Cattlemen are expected to testify in favor of LB 572.

Nebraska Farm Bureau has not taken a position on this bill, but has member policy that the brand committee should have the fee authority necessary to fund its programs. Farm Bureau’s position is that the brand inspection law should be broadened to encompass the entire state.

Independent Cattlemen of Nebraska will likely oppose the bill over concerns with the use of certain terms and revisions to the fee structure.

The Nebraska Beef Producers Committee, as mentioned above, requested that the RFL fee be lowered to 10 percent of the per/head inspection fee, so it’s uncertain if their membership will support the bill.

LB 614

LB 614 is a short bill that amends the Nebraska Brand Act to strip the provisions related to the RFL program.

Erdman introduced his bill one year after Sen. John Stinner introduced LB 1165, which would have eliminated the brand committee, ended brand inspection and the collection of inspection and RFL fees, and transferred brand recording to the Nebraska Department of Agriculture. Stinner’s bill drew support largely from the Nebraska Beef Producers Committee members, and LB 614 is a fitting rebuttal to LB 1165.

LB 614 sends a reminder to the small but vocal minority of RFL operators complaining about fees: The value of the RFL program is that it allows them to ship cattle to slaughter without an inspection, which helps them avoid the cost of shrink. That is a benefit not afforded to non-RFL producers. Participation in the RFL program is voluntary. If they don’t want to pay the RFL fees, they can undergo physical inspection like the rest of the cattle producers in the state.

In short: “Keep your powder dry.”

Abolishing the RFL program could provide roughly $2 million in increased annual fee revenue to the Nebraska Brand Committee, however, the number of brand inspectors required to physically brand inspect the sheer volume of cattle would likely rival a standing Army.

Because of that increase in personnel required to physically brand inspect that many cattle, the Nebraska Brand Committee is expected to oppose LB 614. Nebraska Cattlemen and The Beef Producers Committee are also expected to oppose the bill. ICON has signaled that it will support LB 614 as it levels the playing field and ensures the same inspection fee applies to everyone.

Nebraska Farm Bureau has not taken a stance on this bill, but has member policy that recognizes the need for a registered feedlot inspection program and believes that an equitable fee structure should be developed to continue the program. They do not support an exemption from fees for feedlots participating in the program.

TESTIMONY

Due to the continuing COVID restrictions there are four ways to offer input on the bill during the hearing on Feb. 9.

1) Be physically present to give verbal personal testimony, at which point your name will appear on the committee statement

Because of covid, seating in hearing rooms is limited. The ag committee hearing room holds only 20 people instead of the normal 120. If there are a lot of testifiers, some people may need to remain in the hall until seats open up.

The committee has asked that seats only be taken up by those wishing to testify for the bill being discussed. If there are more people than can be accommodated by seating, the committee will ask testifiers to vacate the room after testifying to allow someone waiting in the hall to come in.

There will be a pause at the end of each bill.

2) As an alternative to verbal testimony, you can offer written testimony, which should be no longer than 2 pages, single spaced (12 point type), or 4 pages double spaced.

Written testimony must include 12 copies and be hand-delivered to the hearing room on the day of the hearing between 8:30 and 9:30 a.m. by the person giving the testimony (you cannot have someone else hand testimony in for you).

Names for written testimony will appear on the committee statement.

3) Letters for the record can be submitted by hand or e-mail to the clerk of the committee, Rod Krogh, rkogh@leg.ne.gov) by noon CT, on Feb 8 (the day before the hearing). That deadline is being strictly enforced.

The chair of the committee (or vice chair for LB 571 and 572), will announce the received letters for the record and names of each person (unless there is a particularly long list), and will distribute copies of the letters to each member of the committee.

Unlike written testimony, letters will not appear on the committee statement.

4) Comments can be submitted online on the individual bill’s page on the legislature’s website. Visit the links below and click the “Submit Comments Online button.”

LB 571: https://rb.gy/iuflil

LB 572: https://rb.gy/jkqf4e

LB 614: https://rb.gy/lhxuvb

 


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