Appeals court rules in favor of R-CALF in checkoff case

On April 9, the United States Court of Appeals for the Ninth Circuit upheld a lower court ruling that the Montana Beef Council (MBC) can not collect the $1 beef checkoff without consent from the payee.

U.S. District Court Judge Brian Morris for the District of Montana ruled June 21, 2017, that the beef checkoff program violates the first amendment, and placed an injunction on the Montana Beef Council preventing it from retaining checkoff funds without consent from the payer.

According to R-CALF USA CEO Bill Bullard, the Montana Beef Council is still allowed to collect the one dollar federal checkoff for each beef animal sold, but it must forward the entire dollar on to the Cattlemens Beef Board unless it obtains consent from the payer to retain the other half of the dollar.

By requiring every producer to pay the $1 per head beef checkoff, the Montana Beef Council had been violating free speech rights of the ranchers, said the judge.

The Beef Checkoff is a federal tax that compels producers to pay $1 per head every time cattle are sold, half of which is used to fund the advertisements of private state beef councils, like the Montana Beef Council. The Montana Beef Council is a private corporation whose members include representatives of the largest multinational beef packers, said R-CALF.

In most cases across the country, the federal $1 beef checkoff is collected by state beef councils or commissions. The states forward half of the dollar on to the Cattlemen’s Beef Board, who oversees spending of the federal checkoff, and most state beef councils retain half of each dollar in-state. In Montana, R-CALF USA alleges that because the organization is a private one, not managed by elected individuals, that it was violating ranchers’ right to free speech by compelling all ranchers to pay the $1 per head.

The court wrote in its opinion that “the district court did not abuse its discretion by finding that the instant assessment likely violated R-CALF USA’s First Amendment rights.” The preliminary injunction upheld by the Ninth Circuit today enjoins Agriculture Secretary Sonny Perdue from compelling Montana ranchers to subsidize the private speech of the Montana Beef Council without first obtaining the affirmative consent from the rancher-payees.

“Today’s ruling ensures that for the first time in over three decades Independent Montana cattle producers have a choice as to whether to continue funding a private message that essentially says that beef is beef regardless of where the cattle from which the beef was derived was born or raised. That generic message is contrary to the interests of Montana ranchers who want to capitalize on the superior beef products that are produced from their high quality, USA-produced cattle,” said R-CALF USA CEO Bill Bullard.

The Montana Beef Council promotes the message that there is no difference between domestic beef produced under U.S. food safety laws and beef produced in foreign countries. It has paid for advertisements for the fast-food chain Wendy’s, for example, to promote hamburgers that use North American beef, meaning beef that can come from anywhere on the continent, but not necessarily Montana or even the United States.

Before the appellate court in early March, an attorney for the case argued that unless the government actually appoints the council and reviews its activities, the First Amendment prevents ranchers from being forced to fund the private council’s speech. Domestic ranchers have the right to fund a message they believe in, or at least one for which they can hold their government accountable.

The Montana Stockgrowers Association has helped the Montana Beef Council reach producers who do wish to donate to the beef promotion program. They support the MBC’s messages.

“We are disappointed in yesterday’s ruling but remain supportive of the Montana Beef Council. We are currently reviewing the opinion to determine what the future structure of the Montana Beef Council will be moving forward. The ruling does not eliminate paying the beef checkoff. It merely changes where the funds are allocated. If Montana ranchers want their checkoff funds to remain in the state, they must sign the producer consent form,” said Kori Anderson, communications director for the Montana Stockgrowers Association.

Since last June, the MBC has had to obtain consent from cattle owners before collecting the checkoff.

According to a March Feedstuffs story, the MBC normally takes in about $800,000 per year from checkoff funds, but so far this year has only gotten about $150,000. R-CALF USA says this is evidence that many Montana ranchers do not want to pay the checkoff.

The Montana Beef Council had not obtained permission to release a statement as of print time.

–Staff Report