Utah ranch files lawsuit over beef checkoff

Utah Senator Lee introduces federal checkoff legislation

Sens. Mike Lee (R-UT) and Cory Booker (D-NJ) introduced the Opportunities for Fairness in Farming Act of 2017 (OFF Act) on March 28, a measure intended to bring much needed transparency and accountability to the federal government’s commodity check off programs.

Checkoff programs are mandatory participation programs under the US Department of Agriculture. These programs are funded through compulsory fees on producers of eggs, beef, pork and a multitude of other agricultural products. The programs and associated boards have received criticism in the past for a lack of transparency, apparent conflicts of interest, misuse of their funding and anticompetitive behavior.

“A recent FOIA request uncovered some troubling emails between the American Egg Board and top executives in the egg industry,” Lee said. “This was a classic case of Big Government and Big Business working together to squeeze out smaller rivals and squelch innovation.”

The American Egg Board CEO at the center of those emails has since resigned, but questions remain about the board’s activities.

“This bipartisan legislation will bring much needed reforms to federal checkoff programs,” Senator Booker said. “By cracking down on conflicts of interest and anti-competitive practices, and bringing additional oversight and transparency, this bill will help to level the playing field for small family farmers and entrepreneurs.”

This bill is a direct response to the egg board scandal and past checkoff program misconduct, and the changes proposed by this legislation are designed to improve checkoff board behavior and avoid similar conduct in the future.

A companion bill cosponsored by Reps. Dave Brat (R-VA) and Dina Titus (D-NV) has been introduced in the House.

To improve the practices of checkoff programs, the Opportunities for Fairness in Farming Act of 2017 would:

Clarify and fortify the prohibition on checkoff programs from contracting with organizations that lobby on agricultural policy

Establishes program standards that prohibit anticompetitive behavior and engaging in activities that may involve a conflict of interest

Requires transparency through publication of checkoff program budgets and expenditures, and means for audits of compliance

A Utah rancher has filed suit against the U.S. Secretary of Agriculture and the U.S. Department of Agriculture, the Utah Ag Commissioner and the state of Utah over the one dollar federal and fifty cent Utah state beef checkoff.

According to the class action complaint, filed May 5 in the third judicial district court in and for Salt Lake City.

State beef commissions or councils exist in nearly every state in the U.S., to collect the one dollar federal beef checkoff every time a beef animal is sold. Each state submits fifty cents of each dollar to the Cattlemen’s Beef Board (CBB), and retains the other fifty cents for use as they choose. Often times, an additional portion of the remaining fifty cents is also sent to the Federation of State Beef Councils – a division of the National Cattlemen’s Beef Association (NCBA). The NCBA is also the largest contractor with the CBB.

In the complaint, the plantiffs said they do not take objection to the fifty cents that is submitted to the CBB, their concern is with the remaining fifty cents, and the additional state checkoff – another fifty cents – that is managed by the Utah Beef Council.

Because the CBB is under federal oversight and their activities have already been deemed “government speech” by the Supreme Court, Evergreen Ranch doesn’t take issue with the fifty cents of the federal checkoff that is forwarded there.

The plaintiff said that the Utah Beef Council is a “private entity” and they believe that, for Utah’s producers to be compelled to finance the “private speech” of this “private entity” is unconstituational.

“In compelling plaintiffs to associate with, support, and subsidize the private speech of the Utah Beef Council, the defendants are violating plaintiffs’ rights under the First Amendment to the United States Constitution and Article I § 1 of the Utah Constitution,” says the complaint.

Brent Tanner, who has served as executive director of the Utah Beef Council for 25 years, said that because his group isn’t named as a party in the lawsuit, he doesn’t feel comfortable commenting on the specifics of the lawsuit until the defendants have done so.

“As beef industry leaders in Utah we feel that we are promoting our product to the benefit of all of our producers. We work hard to be sure that oversight requirements are being followed by the council,” he said.

Evergreen Ranch seeks damages in the amount of the last four years worth of checkoff funds it has paid and reimbursement of court costs. They are also hoping to see a declaration that the state beef council’s use of mandatory checkoff funds is unconstitutional,

Attorney Robert Fuller said the plaintiff filed the suit as a class action because there are many others in the state of Utah who have also paid the checkoff involuntarily, and if he and his client win the suit, it will then apply to every other Utah individual who has paid the state and federal checkoff over the last four years, who objects to paying or who did not consent to paying it.

Fuller, himself a sixth generation rancher, said Evergreen has two main complaints.

1 – The Utah Beef Council is a private entity, not under the jurisdiction of the government, and Evergreen ranch is being forced to support the private entity.

2 – The checkoff violates Evergreen Ranch’s constitutional freedom of speech.

Fuller grants that the fifty cent state checkoff is refundable within 60 days, but he said his client believes that the process is complicated and that the beef council does not provide sufficient information about the refund process.

The Utah Beef Council refused to show him a copy of the annual budget when he asked, said Fuller.

Fuller pointed out that some dairy producers are selling baby calves right now that are hardly worth the fuel it takes to drive them to town. “$1.50 is a pretty big percentage of the value of that calf,” he said. He added that profit margins for all cattle producers in his state are slim, and that every dollar makes a difference to their bottom line.

In May of 2016, national cattle organization R-CALF USA, based in Billings, Mont., filed a similar lawsuit alleging that it is unconstitutional for the government to allow private beef councils, like the Montana State Beef Council, to keep and spend one-half of all checkoff dollars to pay for the beef council’s private speech. Specifically, the group alleged it was unconstitutional for the government to compel its members to fund the private speech of state beef councils.

On Dec. 12, the U.S. magistrate judge issued his findings and recommendations in the R-CALF case. The magistrate judge recommended that the U.S. District Court for the District of Montana grant their request for a preliminary injunction. The preliminary injunction would stop the government from continuing to allow the Montana State Beef Council to use checkoff dollars to fund its advertising campaigns unless a cattle producer provides prior affirmative consent that his/her checkoff dollars may be retained by the council for that purpose. R-CALF USA continues to wait for the ruling from the district court.