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Showdown over competing Nebraska brand bills

Spike Jordan
for Tri-State Livestock News

LINCOLN, Neb. — Tuesday, Feb. 18 will be the last day of the short 60-day session that the Nebraska Unicameral’s Agriculture Committee can hear testimony on bills. And owing to expected testimony on two competing brand bills, Tuesday will likely be one of the ag committees longest days this session.

As previously reported by TSLN, LB 1165, introduced by Sen. John Stinner of Gering, would be a boon to a select group of big feeders and a foil to both cow/calf ranchers and county governments. It would disband the 79-year old Nebraska Brand Committee, end brand inspections in the state (laying off nearly 80 brand inspectors whose responsibilities would then be passed on to sheriff’s offices), and transfer the responsibility for recording brands to the Department of Agriculture. In addition, the committee’s more than $3 million cash-fund — which is producer’s money used to fund committee operations — would be swept into the state’s budget.

The alternative bill, LB 1200, was brought forward by the brand committee and introduced on the last day of bill introduction by Sen. Tom Brewer of Gordon. At 59-pages, it keeps the Brand Committee intact, but seeks to compromise between competing segments of the cattle industry while making some big changes to the brand law.

The brand committee’s John Widdowson told TSLN Thursday evening that an amendment to LB 1200 was delivered to the ag committee late on Thursday, and it is unclear when exactly the committee will take up the amendment or when it will be published online.

Those involved with LB 1200 will admit that it has a lot of moving parts and was hastily produced as a response to LB 1165. For example, figures included in the text of the bill introduced were “place holders” until after the committee had sharpened its pencils and met with accountants to develop a strategic plan, which includes projections out to 2030.

“What we really want to get out is that the final numbers in (LB 1200) are the caps,” Widdowson said. “That is what we have the statutory authority to go up to the cap if we need to, and we can go down with those fees as the committee needs to.”

Widdowson said setting the caps at the maximum projected need will make it so the agency does not have to go to the legislature each time it needs to keep up with the rising cost of doing business.

“We built in future cost of inflation and expenses going up,” he said.

FEES

LB 1200 contains some big changes to the fee structures for various services, with some of the amended numbers broken down below.

RENEWAL FEES: Brand renewal fees will jump from $50 every four years to $200 every four years. The reasoning is that of the 33,000+ brands currently recorded and active in Nebraska, a sizeable chunk are renewed as family heirlooms and passed on long after the cattle and ranches have been sold. The committee feels that if these heirlooms are valued, the fee should reflect that value. For active brand users, the increase amounts to an annual renewal fee instead of once every four years.

REGISTERED FEEDLOTS and Grow Yards: The maximum fees Registered Feedlots (RFLs) will pay for a new permit will be $600 as an initial fee, and a max $350 fee to renew the permit. The bill also adds RFL permitting for grow yards, which will be capped at $150. Rather than the RFL fee structure being directly to headcounts, the “audit fee” for RFLs will be capped at $600 per audit. However, under this arrangement the frequency with which those audits are required will vary. For example, Widdowson said RFLs with one-time capacities of 10,000 head or fewer will only be required to have an inspector come to the facility once per quarter to perform an audit. An RFL with a 10,000 head capacity would pay a maximum of $2,400 in audit fees, versus the $10,000 annual fee they currently pay. The size/frequency scale for the required audits maxes out at every month for RFLs with 62,500 or more head, meaning those lots will be audited once a month at a maximum $600 per audit. Fees for those RFLs will drop from $62,500 to about $7,200.

LOCAL BRAND INSPECTION: Widdowson said that local brand inspections will be renamed “physical inspections,” and that the current statutory fee cap of $1.10 will be lifted to a maximum $1.50. The reason for this is that producers are currently charged $1 per head for local inspections, while the cost to the brand committee is about $1.33. Making the person requesting the inspection pay for the inspector’s mileage does help the committee better pay for the inspection, however with the reduction of RFL income, the fees will need to increase if it is to match the cost of inspection. However, it is not projected to increase beyond $1.50, Widdowson said.

MILEAGE: The $10 fee for an inspector to come to your location will disappear. Regardless of whether it is an RFL audit or a physical inspect, the party requesting an inspector will be responsible for paying the mileage. This

48-HOURS NOTICE: If you require a physical brand inspection, you will need to give the agency 48-hours’ notice, otherwise a $50 surcharge will be added to the inspection bill. This is intended to help cut the costs associated with last-minute requests for inspections due to inspectors accruing overtime. It also embodies an old adage: “A failure to plan on your part does not necessitate an emergency on mine.”

Widdowson said that the Committee’s intent is to have each arm of the brand committee be self-sufficient, rather than having one side of the house covering or subsidizing the expenses in another.

“We want to stop pitting RFLs against the cow/calf guys,” he said. “We’re trying to match up the fee to the service that we provide. We want it so that no single segment of the industry can say that the fees they pay are subsidizing someone else.

“Is fair equal? No. Fair is fair, and it’s not always equal,” Widdowson said.

Future-proofing

As technology advances, the brand committee wants keep up and stay relevant. While the USDA’s APHIS RFID mandate has been zapped by lawsuits and temporarily withdrawn, the brand committee wants to make voluntary use of Electronic ID available as either a companion or an alternative to branding

Interim Brand Committee Director and Chief Investigator Dave Horton told TSLN that manufacturers have reported more than a million EID tags sold in the state of Nebraska, mostly to dairy farmers and registered purebred stock growers. Some are eager to adopt the technology, while others express reluctance and skepticism.

LB 1200 also contains provisions for nose prints and retinal scans, and other forms of ID, in order to give the committee enough flexibility to change practices to match what producers are using. By “future-proofing” against these changing trends, the committee hopes it can have a brand law that it won’t have to revisit for at least a decade.

“We’re not in the business of telling people what they need to use,” Widdowson said. “We want to give them a menu of options to pick from that keep them within statute and lets the producer decide what method is most valuable and cost effective.”

However, the primary producer concern should be that branding and inspections goes beyond just merely identifying which cattle belong to whom.

A brand represents an individual’s legal title to that personal property. When a rancher needs to take out an operating loan and uses cattle for collateral, it’s the brand that ties that transaction to a real asset. Acts of fraud, such as check kiting and Ponzi schemes, are the new cattle rustling in the West. Those crimes are perpetrated more easily and frequently in areas without regimented brand inspections than they do within. Criminals are caught, investigated and prosecuted because of brand inspections and investigations. Without those safeguards and sureties, banks and investors can potentially be placed on the hook for millions in bad loans overdraft fees in the fallout of failed fraudulent feedlots.

And if it has happened before, it will happen again.

Who is behind these bills?

Stinner’s bill, LB 1165, seeks to accomplish what a 2017 lawsuit from a nonprofit calling itself “Nebraska Beef Producers Committee” failed to do: get rid of the brand committee and end inspection fees.

The Beef Producers had sued The Nebraska Brand Committee and its former executive director, Bill Bunce, arguing that Nebraska’s brand law was unconstitutional, and sought to stop the brand committee’s enforcement of the Nebraska Brand Act. They lost that lawsuit, with the judge telling the Beef Producers that the appropriate redress of their grievances was the Nebraska Legislature.

While previous news reports from multiple mentioned that the Beef Producers Committee was comprised of feedlot operators, none were publicly identified. However, Lincoln-based lobbying firm Zulkoski Webber LLC lists Nebraska Beef Producers Committee as a current client on its website, and a review of documents filed with the Nebraska Accountability and Disclosure Commission lists the lobby as being accountable to Jerry Adams, CEO of the Broken Bow-based Adams Land and Cattle LLC.

Mandatory disclosure records show that the Beef Producers, under Adams, have also hired another Lincoln-based lobby, Peetz & Company, to represent it “on any & all matters of importance to the Nebraska Beef Producers.”

Forms show that both firms were retained for the 3rd and 4th quarters of 2019 and the 1st quarter of 2020. The two firms have been paid roughly $88,000 by Nebraska Beef Producers over the last two years. Zulkoski Webber’s office told TSLN that its lobby work for the Beef Producers relates to brand laws. Peetz & Company did not return a message requesting more information. A phone call to Adams was not returned by press time.

Regardless of the money being spent, the introduction of LB 1165 sounded the alarm among producers and triggered a response from a brand committee which has a reputation for butting heads with and blowing off the legislature. Stinner’s bill got the brand committee’s attention, and LB 1200 is intended to be a compromise that’s sustainable, Widdowson said.

Nebraska Cattlemen’s support of LB 1200 is expected, owing to its mixed membership makeup of cow-calf producers – who represent the numbers – and feedlot operators — who represent the finances. It has to thread the needle and keep a delicate balance of serving both interests.

Nebraska Farm Bureau, on the other hand, has a more rigid brand inspection policy adopted by members in 2016.

“We support the work of the Brand Committee and believe the Committee should have the fee authority necessary to adequately fund its programs,” the Farm Bureau policy manual states. “Nebraska’s brand inspection law should be broadened to encompass the entire state. We recognize the need for a registered feedlot inspection program and believe an equitable fee structure should be developed to continue the program. We do not support an exemption from fees for feedlots participating in the program.”

But how do you define “equitable fee structure,” and what constitutes “an exemption” of those fees? That remains to be determined, and if that question is not raised during testimony on LB 1200, Farm Bureau members will have to decide in December, as its current brand inspection policy will expire if it’s not renewed or amended.

It’ll be a tough sell

The eight-member Agriculture Committee has an interesting makeup: four of the senators serving on the committee represent districts in Omaha; none represent districts inside the brand inspection area. Concerned cattlemen need to make an effort to show up, as senators will largely be relying on the testimony they hear Tuesday to make a decision on the path forward.

Rick Leonard, the ag committee’s legislative research analyst, said that because both bills are expected to bring a big crowd, the committee reserved the largest hearing room available – the Warner Legislative Chamber, which housed Nebraska’s Senate before the 1937 adoption of the unicameral did away with it. Testimony on the bills will likely go beyond 6 p.m.

In the week before the hearings, Brewer’s office teamed up with the Brand Committee, Nebraska Cattlemen and Nebraska Farm Bureau to host a luncheon in Lincoln on Tuesday, Feb. 11, and gave 30 senators a crash course on Nebraska’s brand laws, in hopes that they’ll win support LB 1200.

However, it’s a short session and there’s a lot of heavy lifting on LB 1200 that still needs to be done. There’s a chance that after the hearings, neither bill will advance to floor for debate. That would end the panic and give more time for the Brand Committee to get feedback from the people LB 1200 affects.

And hopefully they’ll deliver a more polished bill earlier in the next session.

But don’t count that chicken until it’s hatched.


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