NE Brand bills draw more dissent than support

LINCOLN, Neb. — The Nebraska legislature’s agriculture committee on Tuesday heard about four hours of testimony on a pair of bills relating to the Nebraska Brand Committee. Testifiers were cattle producers representing different segments of the industry, as well as county law enforcement officials, heads of farm and ranch groups, and lobbyists and lawyers.

Testifiers were given four minutes to make their case, with both bills tallying more dissent than backers.

LB 1165

The bill that would dissolve the Nebraska Brand Committee, end brand inspections and fees, and move brand recording under the Nebraska Department of Agriculture received testimony from seven proponents and nine opponents.

In his opening statement, senator John Stinner said that he was not representing any specific interest other than his position as the appropriations committee chairman. Stinner champions a mantra of “stay within your means” after having been charged to ensure that every agency that goes before his committee has a budget that sustainably manages expenses versus revenues in a way that does not require an increase in taxes or fees.

As mentioned in previous coverage, at a hearing for an interim legislative study hearing in October of last year, Stinner pressed the brand committee on the issue that inspection fees were set at $1 per head, however, the costs to the agency to perform inspections was calculated at $1.33 per head, with most of those expenses being derived from milage, overtime, and overhead associated with the purchase of an information technology program to electronically record and catalog brands and inspection reports.

Stinner said that he did not want his bill to be seen as an unfunded mandate that pushes inspection duties and investigation responsibilities from the non-code cash-fund Brand Committee onto county governments and local law enforcement. However, after looking at other states, like Texas (where inspection is voluntary), and Oklahoma and Kansas, (where there are no inspections), Stinner said that the brand committee needs to change something to stay within the confines of its current fee structure.

A group of individuals representing the feedlot sector which calls itself the Nebraska Beef Producers Committee gave testimony in favor of LB 1165. The Beef Producers Committee had previously filed an unsuccessful lawsuit against the Brand Committee and its former Director Bill Bunce in an attempt to overturn Nebraska’s brand law and prevent the brand committee from collecting inspection fees for registered feedlots. The first individual from this group was Jack Lawless, feedlot manager for Gottsch Cattle Company, which has yards both inside and outside the brand inspection area. Lawless had previously been invited by Stinner to testify before the ag and appropriations committees at the hearing last October, but neither he nor Stinner disclosed Lawless’s affiliation with the Beef Producers Committee.

Lawless echoed a central tenant from the 2017 lawsuit: that the brand law acts as a barrier to commerce based on where a feedlot operates, and that the brand act is arbitrary and made no sense under the current business climate. Lawless was followed by another Beef Producers Committee affiliate, Jerry Adams, CEO of Adams Land and Cattle in Broken Bow. As we reported last week, Adams name was listed on financial disclosure forms filed with the Nebraska Accountability and Disclosure Commission that show he hired two lobbying firms to represent the Nebraska Beef Producers Committee on brand issues.

Adams said that he wants brand registration, ownership and opportunities, but “We need to level the playing field in state and out of state” and that fees “need to reduce, not increase.” He argued that eastern Nebraska counties have not opted in to the inspection area because the find no value versus the cost of inspection, and that it’s not right that registered feedlots should subsidize the rest of the industry.

Scott Eisenhauer, and his father Richard Eisenhauer testified in favor of 1165 as producers from Knox County Nebraska, which interestingly is the only county in the state of Nebraska to be a split-inspection county. Scott Eisenhauer said that Knox County is a microcosm of the issue and that “brand insepction penalizes people who are honest.” He argued that the Brand Committees stats for recovery versus cost to run the agency would indicate that it spent $5 million to recover $600K worth of lost or stolen livestock. Richard Eisenhauer read a letter from Ryan Creamer, owner of Creighton Livestock, who wondered just how deals with sellers from inside and outside the inspection area. Creamer said that the fees push customers away to salebarns either outside the inspection area or into the non-inspection area of South Dakota, and that processing the paperwork for owners outside the inspection area is difficult. The loss of customers to Creighton Livestock is not only to the salebarn, but a loss of food, fuel, and lodging dollars spent in the community of Creighton, he wrote.

John Sennett, an attorney from Broken Bow, echoed the point of Scott Eisenhaur’s argument about cost versus return from inspections, saying that by his math, of the 466 estrays (not stolen, but lost cattle turned in), the brand committee recovered last year, livestock would need to be valued at $11,000 per head to be an equitable return on investment for what inspections cost. He also said that the brand committee is not a private group, but a mandatory group that does not provide a certain segment of registered feedlots any benefit.

Also testifying in support of LB 1165 were Darrel Entz, a Custer County cattle producer originally from Kansas, and Corby Gilbertson, a lobbyist for Tyson Foods, who said that 1165 would end bureaucracy while still protecting the tradition of branding. Gilbertson said that Tyson has plants inside the inspection area (Lexington) and outside the inspection area (Dakota City), and said that the Dakota City operation works fine without brand inspection. To her knowledge they have not been able to locate records of inspectors stopping stolen at the Lexington facility.

Entz incorrectly said that he’s “forced” by the brand committee to brand his cows, and that 50 percent of the cattle he buys as a backgrounder are slick (branding is optional). Entz said he’d rather have options to use EID and said that a statewide registration system with an end to inspection would be needed.

In opposition to LB 1165, were three county sheriffs, including Don Henery, the sheriff of Knox County, who said that while he’s been a cattle producer himself, the assistance that Nebraksa Brand Committee investigators and inspectors provide to his office has been essential. In the past, they have worked together to help recover stolen cattle from sale barns and packing plants in South Dakota. In a state where “Equality before the Law” is the motto, Henery said that the costs of performing those inspections and investigations — which sometimes can take hundreds of hours and stretch across multiple states — should not be pushed onto local offices. He also asked rhetorically what government agency doesn’t go into the red from time to time, and why the state would try to reinvent the wheel.

Chuck Reid, the sheriff for Boyd County, said that his county has two lockers and 12 feedlots, with only one inspector to go between all of them. But with the assistance of the brand committee, his office investigated and confiscated roughly 1,000 head last spring that were being mistreated by the owner. Without the brand committee, it would have be up to him and his two deputies to sort that out.

Ben Matchett, sheriff of Holt County, said that he has five deputies to cover a large area, and if for some reason the brand committee were to go away, he’d have to hire another two to three deputies, which would be unfeasible as his budget is capped at a 3 percent increase. He also said that brands often confuse him and that he “couldn’t make heads or tails of them,” and that his office relies on brand inspectors a great deal.

Beth Bazyn Ferrell, Legal Counsel for the Nebraska Association of County Officials (NACO), gave a succinct opposition testimony that LB 1165 would be an unfunded mandate from the legislature that raises county taxes, and as many counties are already against their mill levy cap, there’s not much room to expand and provide for the extra law enforcement duties currently performed by the Nebraska Brand Committee inspectors and investigators.

Nebraska Farmers Union President John Hansen, Independent Cattlemen of Nebraska President Jim Dinklage, Melody Benjamin of Nebraska Cattlemen testified in opposition to LB 1165 on behalf of their groups, and Dave Horton, Chief Investigator for the Brand Committee, and Chris Gentry, a Hyannis rancher who is on the Brand Committee’s board, also testified against the bill.

LB 1200

LB 1200, which was hastily introduced as a response to LB 1165, would make some of the most significant changes to the brand committee that have occurred over its 79 year history. By TSLN’s tally, it drew seven testifiers in support of the bill, and 11 who voiced opposition. Neutral testimony was given by an accountant hired by the Brand Committee as to how it arrived at the fee projections included in the forthcoming amendment to LB 1200.

In his opening statement, Sen. Tom Brewer was candid in saying that the 96 hours leading up to the hearing were spent responding to the flood of phone calls and text messages from ranchers in his district, which encompasses a large swath of the Nebraska Sandhills. Brewer said that the last four days were more painful than the previous three years. However, Brewer carried the bill for the Brand Committee, and deferred questions on the nuts and bolts of the bill to John Widdowson, the committee’s former chairman who was hired last week as the committee’s first permanent executive director since 2017.

Widdowson said that the revised fees structure were developed with the aid of an accountant, and that the strategic plan the committee has developed is projected out to seven to 10 years, to account for increases or decreases in cost. He said that he’s heard concerns over the four years that he was a committee member and that he wanted to remove friction from between the segments of Nebraska’s cattle industry and end the discussion of one group (feedlots) subsidizing another (cow/calf producers).

Another important impact of LB 1200, is that it would give inspectors authority to issue a citation for lack of inspection or proof of ownership, and that the citation would have an actual penalty associated with it in order to encourage compliance with brand laws.

As previously reported by TSLN, some of the large changes would be that inspectors would charge millage to travel to locations, rather than the current $10 flat fee surcharge. Registered feedlots would also be charged an audit fee, rather than one-time capacity per-head fee to operate. Widdowson said this fee better reflects the services that the brand committee provides to RFLs. Growyards would also become eligible for a RFL-type audit structure, meaning that growyards would not need to have cattle re-inspected before shipping to their affiliated RFLs.

However, the inspection fees for cow/calf producers would increase to no more than $1.50 per head.

Nebraska Cattlemen’s support of LB 1200 was brought by Melody Benjamin, who said that while there is a difference of opinion across Nebraska Cattlemen’s membership, the bill provides a comprise with equitable solutions for the many segments. Nebraska Cattlemen has long had a policy that the brand committee needed to embrace automation and modernize itself to keep in pace with the needs of commerce. She said that RFLs who don’t need inspection pay disproportionate fees and that cow/calf producers are willing to pay more for local inspections. She also reiterated a point made by Widdowson, that the fee structure is a maximum capacity so that the brand committee does not have to return year after year to ask the legislature to raise its authority.

Brenda Masek, who is a Vice President at Nebraska Cattlemen, testified on her own behalf as a cow/calf producer and said that while the issue is contentious, is a discuss that the cattle industry needs to have. Dissolving the brand committee and ending inspection all together is not a solution, she said. In an industry where margins are already tight, for the cow/calf producer, the loss of one animal — be it through theft or cattle’s inclination to wander across fences — tightens those margins. Having an organization to return those cattle is important at a time where every head that makes it to sale matters.

Masek also said that the size of pastures and cattle herds in the west are larger than in the eastern part of the state, and that while eastern Nebraska producers are able to get an eyes-on count of their cattle, sometimes on a daily basis, that is more difficult in the expanses of the west. When asked about why the whole state of Nebraska is not an inspection area, Masek had a line that resonated with the agriculture committee: “cows don’t vote, people do.” It was a fact for which many of the senators on the eastern part of the state could breath a sigh of relief.

Other proponents were John Schroeder, feedlot manager for Darr Feedlot, who said that the inclusion of growyards into the RFL program was a good thing and allowed movement from affiliate backgrounders to Darr’s lots without added inspection costs, since those cattle movements are not technically changes of ownership. He said it was a start to fixing the problems faced by his segment of the industry, but not the end of the discussion.

Dave Horton, the committee’s former interim director and current chief investigator, also testified in favor of the bill, saying it modernizes the committee and makes the services that the agency is mandated to provide more fair and equitable. He said that a lot of detractors are hung up on the critical audit that the committee received in 2016, but that as of the 2019 audit, the committee has made changes and that LB 1200 would help it continue on the right track.

Bruce Rieker, Nebraska Farm Bureau’s Vice President of Governmental Relations, said his organization supports LB 1200 and that it “let the two sides work it out.”

Michael Jacobson of Gordon, Nebraska, said that a stroke left him unable to brand his cattle for three years and that it “created a hell of a mess,” that he needed a lawsuit in order to get it all straightened out. His testimony in favor of LB 1200 unquestionably painted the need for Nebraska’s brand laws.

However, LB 1200, was met with a host of resistance, with overlap from the feeder and cow/calf segments a surprising turn of events.

For example, Pete Lapaseotes, an RFL owner of Bridgeport, said that if inspections are not statewide, LB 1200 will never mean that the brand laws in Nebraska are fully equal. He argued that LB 1200 doesn’t meet the needs of producers and that it doesn’t allow Nebraska to be on a competitive footing with other states.

“Please do not send this bill to the floor,” Lapeseotes said.

Jerry Adams also returned to voice opposition of LB 1200, saying that use of EID has been a part of his company’s production system since 2008, and that while it is valuable for his operation to track individual cattle records, it is not a suitable or permanent proof of ownership or ID. In short, the electronic tag doesn’t replace the brand. What does work are brands, health papers and other forms of ID. He also said that in private discussions with Greg Ibach, former Nebraska Secretary of Agriculture and current USDA Undersecretary, that a nationwide EID scheme will not happen in the foreseeable future.

Adams’s statement about EID was echoed by an unlikely ally, Dr. Don Cain, a Broken Bow veterinarian and ICON member, who said that EID “confirms the peter principle in ownership,” and that in his experience, elevating EID beyond the realm its element as a form of legal identification would be a bad decision.

Cain was joined by other ICON members, including form State Sen. Al Davis of Hyannis, ICON president Jim Dinklage, and ICON Roland Paddock of Brown County.

Davis said that the brand keeps honest people honest, and given his past history in the legislature, he did not see $1.50 per head for inspections being reasonable compared to rates in other mountain west states. Davis said that when the RFL program began in the 1970s, RFLs wanted the benefit of shipping at night without inspections and that they were given that option with a “significant break on fees.” He also said that the RFL program was voluntary, and that feedlots could pay the same per-head inspection fees and deal with the associated requirements as the cow/calf producer.

Nebraska Farmers Union President John Hansen said said that the question had always been that feedlots could potentially be a dark spot in the inspection regime wherein stolen cattle could be “laundered,” and that it is critical to include feedlots in that chain of inspection. He said that RFL has already offered preferential treatment to feedlot owners, but now they want more. He said that since organizations like NFU were not invited to the table as LB 1200 was being negotiated and discussed, he isn’t inclined to endorse something he did not take part in.

Allowing RFLs to get a further discount, Davis said, would tear a hole in the brand committee budget. And on the subject of cow/calf producers, Davis said a heavy snow and calving in the the wester part of the state prevented many of those ranchers from testifying in Lincoln on Tuesday. It was argued that NBC needed to host more meetings to get feedback from those ranchers before moving ahead with LB 1200 — it’s too big of a leap without input from the people it’s going to affect.

Jeremiah Rieken, of Gottsch Livevestock Feeders, referred back to Masek’s comment earlier in the hearing saying, “if cows could vote, they wouldn’t vote for inspection.” He said that the overall argument wasn’t an “us vs. them” dispute, but that changing the brand committee puts “an outdate program on life support.” Rieken said that he wants whats best for the cattle, and that inspections are stressful and cost loss of profit due to shrinkage and other issues.

Scott and Richard Eisenhauer returned to oppose LB 1200. Scott expressed displeasure that NC (of which he’s a member) endorsed LB 1200, and that he can trust 99 percent of his neighbors in Knox County not to steel his cattle. He disputed the rising costs to the sheriff’s office as a result of LB 1165. Richard gave background on how Knox County became a split-inspection county, saying that individual counties had opted out, and that the reasoning is the same as why now counties have opted in since 1993. They don’t see the value in inspections.

Toward the end of the hearing, John Sennett, the attorney from Broken Bow, returned to say that it was clear that LB 1200 was a hasty response to LB 1165, and that the latter of the bills forced the conversation on the issue of Nebraska’s brand laws. He suggested that LB 1165 be passed with a provision of a year, so that the brand committee could fine tune LB 1200. If they couldn’t meet the task, LB 1165 would go into affect and the brand committee would be dissolved

But without that deadline hanging over its head, he questioned if NBC would get the job done.

In his closing testimony, Brewer said that in 2010, he had went on a convoy in Afghanistan where they had faced numerous ambushes and IED explosion, and that he would rather go through that experience again than to ever have to draft another LB1200. LB 1200 was not the perfect bill, but something had to be done, and doing away with Nebraska’s brand law was not the answer. He said he’s open to amendments to fix the bill, but that a path forward was needed.

“We have to figure out what ‘right’ looks like.”