R-CALF Checkoff lawsuit expanded
November 6, 2018
Bill Bullard, CEO of R-CALF, said his membership, which he believes represents about 14 percent of the country's beef producers, is committed to stopping the current trajectory of the industry toward the vertically integrated fate of other proteins. To this end, R-CALF filed a lawsuit against the USDA alleging that they are unconstitutionally compelling Montana producers to fund the corporate speech of the Montana Beef Council. Since the original injunction, they have added 13 states to the suit.
"We won a preliminary exemption in that case that said that the USDA could not compel producers unless they first obtain producers' consent," Bullard said. "Only in the state of Montana are producers able to choose whether they want their entire dollar to go to the checkoff program through the Cattlemen's Beef Board or if they want the state to siphon off half their dollar and use it to fund private speech."
Once R-CALF was awarded an injunction, the USDA appealed through the Circuit Court of Appeals. The appellate court, he said, ruled in favor of R-CALF allowing the preliminary injunction to remain in effect.
Once the appeal process concluded, Bullard said R-CALF looked at which states, like Montana, did not have direct government oversight of the checkoff program.
"Not having government oversight is the standard for determining whether it's government speech, which the government is entitled to tax the industry to fund government speech, or is it private speech," he said.
R-CALF identified 14 states — Indiana, Kansas, Montana, Nebraska, Nevada, New York, North Carolina, Pennsylvania, South Carolina, South Dakota, Texas, Vermont, and Wisconsin — that are espousing private speech through a lack of direct government oversight and added them to the suit.
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"As we proceed to obtain permanent injunction, a permanent declaration that this practice is unconstitutional, we want to include all similarly situated states," he said. "(Monday's) ruling allows us to roll these other 13 states into our preexisting lawsuit and proceed as we had originally included them."
The National Cattlemen's Beef Association issued a statement from CEO Kendal Frazier calling the allegations phony and without merit, only serving to divide beef producers and distract beef councils from the important work of building demand for beef. R-CALF, Frazier said in a statement, "has become nothing more than a front group for activists seeking to divide the industry, lessen beef demand and drive producers out of business."
Bullard said the state's receipt of 50 percent of checkoff monies is unconstitutional in the states that lack federal oversight. He likens the system to money laundering.
"Many of the states are sending hundreds of thousands of dollars, if not more, to the NCBA for two things," Bullard said. "One, to give NCBA money to promote beef on a national level. The other, to buy seats on the Federation of State Beef Councils, that is housed, owned and controlled by the NCBA. That's a pay-to-play scheme."
The funds paid by states to secure additional seats, which Bullard said translates to additional influence on the Federation of State Beef Councils, with the funds being unaccounted for is akin to money laundering.
"We believe that's money laundering," he said. "They're siphoning off half the checkoff dollars and those dollars are not subject to the same fiscal controls that are imposed on the national program through the National Cattlemen's Beef Board."
Allegations of money laundering are heavy claims from the perspective of NCBA's John Robinson, vice president of membership and communications. However, he said R-CALF's actions have been procedural, allowing the proceedings to move forward, ultimately allowing the court to hear from someone other than R-CALF.
"That's a big claim to make," Robinson said. "That's a federal crime and I guarantee no one here at NCBA is interested in going to jail and likewise on the state beef councils. Nothing of that sort has taken place and to make that sort of inflammatory, libelous statement is a big step for R-CALF."
Most of the states R-CALF named, Robinson said, have now signed memorandums of understanding with the USDA. Material produced by the state councils is now being reviewed by the USDA in the same manner expenditures are reviewed at the federal level.
"We think that answers their concerns," Robinson said. "We quite frankly think once the court has the opportunity to review that, it will find there are really no grounds for this lawsuit to continue."
R-CALF has been linked to the Humane Society of the United States, Food and Water Watch, Public Justice and other activist organizations that Frazier said stand against cattlemen and women.
"It's unfortunate that R-CALF has chosen to become a puppet in the war being waged by animal rights activists and the vegetarians seeking to drive beef producers out of business," Frazier said. "Let's be clear, though, the groups aligning with R-CALF are choosing a future with shrinking beef demand, less opportunity and more government involvement. That's not the future NCBA members choose, so we will defend the beef checkoff and cattle producers against these attacks."
Fundamental reforms, Bullard said, have been something R-CALF members have been working toward in regard to the current design of the checkoff program for 20 years. One point of contention is checkoff dollars not being utilized to promote beef exclusively born, raised and slaughtered in the United States. The group has also requested the separation between the Federation of State Beef Councils, the Beef Checkoff Program, and the NCBA but both requests, he said, have fallen on deaf ears. Four years ago, R-CALF passed a resolution that the current system is "corrupt and unsalvageable" and that R-CALF should urge Congress to repeal it.
"Our efforts through the executive branch and the legislative branch have met brick walls so now we're pursuing, through the third branch of government, incremental reforms with the overall objective of achieving our member policy, ensuring that beef promotion actually benefits U.S. cattle producers," Bullard said.
It is through this program that Bullard calls corrupt and unsalvageable that he said U.S. producers are compelled through the use of their dollars, the promotion of generic beef, rather than specifically labeled U.S. beef. Bullard said a rising wave of imported beef is coming into the U.S. and producers are forced to pay for the promotion of this beef, a practice he calls fundamentally wrong.
Bullard said the U.S. has not produced enough beef to meet domestic demand in 60 years, necessitating the importation of beef. It is the trade policies, he said, however, that allow the meatpackers to source meat from around the world and then use that product as an undifferentiated substitute for U.S. beef. The industry's stagnant growth, he said is due to the packer's ability during times of strong cattle prices, to scour the globe for cheaper beef to import, reversing the price rally.
R-CALF has also requested the inclusion of Maryland though Bullard said the ruling was inconclusive in terms of the state's inclusion. R-CALF has members in 11 states included in the lawsuit with the exception of Hawaii, South Carolina and Vermont.
The USDA now has 14 days to answer the complaint filed by R-CALF and the case will now proceed in federal district court in Great Falls, Mont.