R-CALF USA goes after 13 more state beef councils with checkoff lawsuit

A court order that has prevented the Montana Beef Council from keeping half of the mandatory checkoff dollar since June of 2017, could now be expanded to include a total of 14 states.

Nearly every state in the nation maintains a beef council or beef commission that collects the $1 per head mandatory Beef Checkoff every time an animal is sold. The state organizations retain $.50 of each dollar for their own beef promotion, research and education projects, and forward the remaining $.50 of each dollar to the Cattlemen’s Beef Board, a group of USDA-appointed individuals who oversee the spending of the approximately $40 million it collects each year.

As a result of the injunction granted to R-CALF last year, Montana producers who want to continue funding their state beef council must sign a consent form requesting that half of the checkoff funds they remit stay in the state. If a producer doesn’t sign such a form, the entire amount collected from that producer is forwarded to the Cattlemen’s Beef Board. Currently no figures are available regarding the amount of funds the group collected since they have been required to obtain signatures of approval from producers, said MBC Executive Director Chaley Harney.

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R-CALF USA, the Billings, Montana-based cattle organization that filed the original lawsuit moved in August of 2018, to expand the injunction to include Indiana, Kansas, Nebraska, Nevada, New York, Pennsylvania, North Carolina, South Dakota, Texas, and Wisconsin. Bill Bullard, the CEO of R-CALF USA said the 13 added states were chosen because they fit the criteria that the district and appellate courts used to determine that the Montana Beef Council was disseminating private speech.

“This is the second step in a multi-step strategy to fundamentally reform the checkoff on the federal level.” Bill Bullard, R-CALF USA CEO

The court observed that a government entity 1) did not appoint MBC members or board members, 2) was not able to pre-approve the speech of the MBC, 3) could not remove council members or discontinue the council, said Bullard.

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“Using those criteria, we looked at all of the beef councils and we found the original 13 that met the court’s standard for an entity espousing private speech,” said Bullard.

In 2005, the Supreme Court ruled that the Beef Checkoff is “government speech,” overturning an 8th Circuit ruling that it is unconstitutional because it forces producers to fund a message they may not agree with. With that in mind, R-CALF USA filed the original lawsuit in 2016, claiming that the Montana Beef Council’s message did not qualify as “government speech” and the producers should not be forced to finance it.

The original lawsuit was filed against USDA, who recently filed a memorandum in opposition to the plaintiff’s motion (a document arguing against the request to expand the scope of the injunction.)

USDA says that R-CALF USA should not be permitted to file the action to expand the injunction because it is not timely and because it would prejudice the defendants.

“Allowing a single court to decide matters relating to QSBCs (Qualified State Beef Councils) in thirteen other states is particularly prejudicial to defendants given R-CALF’s delay in seeking supplementation,” states the USDA memo.

“In fact, it is doubtful that R-CALF would have sought leave to supplement its complaint here (as opposed to filing new cases in other district courts) if this Court or the Ninth Circuit had rejected its request for preliminary relief. The Court should not condone R-CALF’s gamesmanship,” says the memo.

The memo goes on to say that if the R-CALF supplementation is allowed, it should be limited to states within the ninth circuit. (Nevada and Hawaii).

Harney said that her organization is not a party in the lawsuit, so she feels like “a kid in the custody battle,” watching the court case from the outside.

Harney said that the Montana Beef Council has not reduced its staff but has reduced operations as the result of last year’s injunction. “We made a lot of cuts to our promotional budget, specifically in areas like retail promotions, cooking classes and beef ‘foodie’ events,” she said. Harney added that the council had to cut funding for some programs in half, specifically those in partnership with the Montana CattleWomen, Montana State University Bobcats, University of Montana Grizzlies, Northeast Beef Promotion Initiative, Stevensville BBQ Championship, Billings365 and Northern News Network consumer radio advertising.

Bullard says that the purpose of the lawsuit was to ensure that only those producers that voluntarily choose to support the Montana Beef Council would fund it. “We are achieving the goals of our members – giving producers a choice. That choice includes whether or not to send money to NCBA through NCBA’s Federation of State Beef Councils.” While the Cattlemen’s Beef Board will has received more funding as a result of the original injunction, the Federation has received less, which is R-CALF’s goal, says Bullard. While USDA must provide oversight of the Cattlemen’s Beef Board’s finances, the same is not true of the Federation.

The Federation of State Beef Councils is a division of the National Cattlemen’s Beef Association, and is composed of representatives of state beef councils. The number of representatives each state is allowed on the Federation is determined by the amount of money each state submits.

In 2016, the Montana Beef Council paid $363,600 to the Federation, with $100,000 of that earmarked for the U.S. Meat Export Federation, allowing Montana four seats on the Federation.

Harney said the Montana Beef Council maintained their four seats on the Federation this year, but she doesn’t know if the funding level will continue when the income is tallied for the current fiscal year.

“If we are successful with our efforts to expand this injunction, it will likely put an end to the NCBA’s ‘pay to play’ game in which they charge exorbitant prices for state councils to have additional seats on the federation of state beef councils.”

According to it’s annual report, the Federation took in about $10.5 million in its fiscal year that ended Sept. 30, 2018.

Bullard said if his group succeeds in expanding the lawsuit to include 13 more states, it would help with their ultimate goal of “fundamentally reforming the checkoff to shut off the free flow of money to the NCBA.

“This is the second step in a multi-step strategy to fundamentally reform the checkoff on the federal level,” he said.

R-CALF USA members have approved policy that calls for the checkoff to be “made more accountable to producers by revamping it, or rebuilding it from scratch,” said Bullard.

“We’d like to see it voluntary on a national basis,” he said, adding many members of his group support the concept of a checkoff, but they believe it needs a overhaul.