Nebraska Supreme Court sides with Brand Committee
Judgement overturned, injunction nullified, lawsuit dismissed
LINCOLN, Neb. – In a decision crucial to the integrity of Nebraska’s Livestock Brand Act, the Nebraska Supreme Court issued an opinion on Friday, May 26, reversing a lower court’s judgement in a case brought against the Nebraska Brand Committee by the state’s largest registered feedlot operator. The court also nullified a permanent injunction and dismissed the lawsuit.
BACKGROUND
Nebraska’s registered feedlot (RFL) program – which has some 100 participating members – allows an RFL to submit cattle for brand inspection upon arrival at a registered feedlot. So long as a registered feedlot is permanently fenced and the cattle do not leave that feedlot, the feedlot operator is then allowed to ship cattle to slaughter without having to have the cattle re-inspected. This arrangement allows the feedlot the benefit of shipping at any time of day and to avoid unnecessary shrink or injury to livestock.
In late 2020, Broken Bow-based Adams Land and Cattle Company (ALCC) sued Executive Director John Widdowson and the five-member committee in Box Butte County District Court in an attempt to protect a 2009 agreement it brokered with the committee exempting certain cattle arriving at ALCC’s feedlots from brand inspection requirements under section 54-1,122 of Nebraska’s brand law. ALCC was the only RFL operator in the state to benefit from such an agreement.
LAWSUIT
Section 54-1,122 of the brand act states, “[a]ny cattle originating in a state that has a brand inspection agency and which are accompanied by a certificate of inspection or brand clearance issued by such agency may be moved directly from the point of origin into a registered feedlot.” The act does not define “directly,” but in context, it means “with no other movement in between.” The act also doesn’t define “point of origin,” but witnesses testified at trial that the term generally means where the cattle originated or were brand inspected, or where change of ownership takes place (i.e. a salebarn or private auction).
Section 54-1,122 further states: “Any cattle not accompanied by such a certificate of inspection or brand clearance or by satisfactory evidence of ownership from states or portions of states not having brand inspection shall be subjected to [brand inspection] within a reasonable time after arrival at a registered feedlot . . . .”
Under the 2009 agreement with the brand committee, ALCC was allowed to move cattle from the point of origin to a background yard first before then moving the cattle on to its RFL without having to have those cattle re-inspected at the RFL. Instead, ALCC was subjected to regular paperwork audits of ownership documents. Such an arrangement was outside of the scope of section 54-1,122’s “direct movement” requirement and was not within the brand committee’s authority to broker, according to two letters the committee sent to ALCC in 2018 and 2020. The letters further went on to state that the committee could no longer honor the agreement and that ALCC would have to submit its cattle for brand inspection like every other registered feedlot in the state. The letters prompted ALCC to sue.
COURT ACTION
As the suit progressed through district court, in early 2021 ALCC filed for and was granted an injunction preventing the brand committee from inspecting any of the roughly 125,000 cattle at ALCC’s three registered feedlots. The injunction was made permanent after an April 2022 bench trial and subsequent Box Butte County District Court decision in June 2022. The brand committee appealed and oral arguments were heard by the Nebraska Supreme Court in March 2023.
ALCC argued at trial and in oral arguments that because the committee had interpreted the statute in ALCC’s favor for more than a decade, the court would have to defer to its preferred interpretation and uphold the agreement. It also tried to argue that a 2016 attorney general opinion stated that cattle are never physically inspected under the RFL program.
The Brand Committee argued that ALCC and the lower court were reading the statute incorrectly and in contrast to how the legislature intended. It also argued that the 2016 attorney general opinion was for a completely unrelated statute dealing with fee schedules.
OPINION
In a 12 page opinion authored by Associate Justice Jeffrey J. Funke, the Supreme Court found that the district court erred in its interpretation of section 54-1,122 and in granting a declaratory judgment and permanent injunction in favor of ALCC.
“Read together, the two sentences [of 54-1,122] provide that if cattle move into registered feedlots from their points of origin with no other movement in between and are accompanied by paperwork that proves they have been so moved, they avoid brand inspection,” Funke wrote. “Otherwise, the statute requires brand inspection. Thus, we agree with the Brand Committee’s interpretation: Cattle that move from their point of origin to backgrounding lots and then later to registered feedlots do not avoid brand inspection.”
In regards to whether the court had to defer to the Committee’s interpretation of the statute, Funke wrote, “We are unconvinced, however, that any historical interpretation by the Brand Committee exists or warrants our deference. The Brand Committee’s 2009 vote, taken together with its actions and omissions thereafter, do evidence an agreement that [section] 54-1,122 would not be enforced against ALCC.”
“However, ALCC’s addendum was an anomaly. The most that can be said is that for whatever reason or reasons, the Brand Committee enforced section [54-1,122] in one way as to ALCC and in another way as to all others for over a decade,” Funke wrote.
RAMIFICATIONS
Be it intentional or unintentional, cattle wind up in places where they shouldn’t be. The integrity of Nebraska Livestock Brand Act relies on the rigid adherence to brand inspection requirements for everyone – especially when cattle change ownership.
For more than a decade ALCC benefited from a sweetheart deal that allowed it to skirt roughly a million dollars’ worth of brand inspection fees and to ship cattle at its leisure. It argued at trial that its internal processes have prevented cattle belonging to other owners from comingling with its cattle at a background yard and being shipped to its RFL and eventual terminal slaughter in error. But the only way anyone can be confident of that fact is if ALCC’s cattle are inspected for brands like everyone else.
It remains unseen how ALCC will comply with the law, and the Brand Committee will likely take some kind of action at its June 6 meeting in North Platte. But the language in the law is no longer up for debate. And just because it’s difficult for an individual or company to follow a law, doesn’t mean that the law shouldn’t have to be followed.
Since 2008, ALCC has used RFID tags to track inventory of its cattle, and while the Brand Committee continues to make progress on establishing an electronic inspection program, it’s still a long ways out from being fully up and running. Electronic tags are a potential avenue for ALCC to align its operation with the speed of commerce and maintain compliance with the brand act. However, there continues to be prominent skeptics.
“From the time we buy an animal, we put an electronic tag in the ear,” Adams Land and Cattle Company CEO Jerry Adams said during public testimony on LB 1200 in 2020. “We follow them clear through our production system to the packing plant. We do that for our production system. We do not do it for brand inspection.”
“Everybody talks about electronic tags and we’ve been there,” Adams said. “There’s a lot of benefits, but we know the downfalls and it will not work and it was very costly. You can put $1 million every year into it, it won’t happen.”
“Electronic tags for brand identification does not work,” he said.
