USDA Gets Stay on Beef Ruling, Continues Checkoffs Without Changes

On July 10, the U.S. Court of Appeals for the 8th Circuit granted the federal government's request for a stay on a South Dakota judge's ruling to halt fee collections under the national beef checkoff program. U.S. District Court Judge Charles B. Kornmann found on June 21 that the beef program was in violation of free speech rights "because it requires plaintiffs to pay, in part, for speech to which plaintiffs object." Another case -- in Billings, Montana - is moving on the same subject, and a ruling is expected in the coming weeks. The U.S. Department of Agriculture (USDA) expressed its disappointment with Judge Kornmann's ruling, and USDA and the U.S. Department of Justice are pursuing an appeal.

"USDA is not making any modifications to the current checkoff programs, except for farm bill changes, until the legal issues surrounding checkoffs are fully resolved -- and that could take some time," said Richard McKee, deputy administrator, Agricultural Marketing Service, USDA.

The beef checkoff ruling is the most recent in a series of complex - and sometimes conflicting - legal decisions involving various checkoff programs over the past several years, including two cases that reached the Supreme Court. In June 2001, the Supreme Court ruled against the Mushroom Promotion Act, primarily because the court believed that mandatory assessments for industries that operate in a free market environment violated free speech rights. However, in 1997, the Supreme Court ruled in favor of a checkoff promotion program for the California peach, plum and nectarine industry, finding that the program was constitutional within the strictly regulated tree-fruit industry.

The beef, mushroom and tree-fruit checkoff programs each hold some similarities and some differences to the two checkoffs in the heavily regulated dairy industry: the Milk Processor Education Program (MilkPEP), funded by a dairy processor checkoff, and the dairy producer checkoff, managed by Dairy Management Inc. (DMI). In April, an activist group filed a free speech lawsuit on behalf of a Pennsylvania dairy farmer against the dairy producer checkoff program. The U.S. District Court in Scranton, Pa., is currently reviewing briefs in that case, with a possible court date this fall. No cases are pending against the processor-funded MilkPEP.

It is possible that either one of the beef cases could eventually end up at the U.S. Supreme Court. The appeals process is often lengthy, so it could take years before legal issues are fully resolved on the constitutionality of the checkoff programs. IDFA will closely monitor the checkoff challenges for possible implications for MilkPEP. ###

Posted July 15, 2002