State beef checkoff challenge court hearing held

R-CALF expects favorable outcome in limiting state checkoff fund collection without previous consent.

R-CALF USA filed suit against the U.S. Department of Agriculture in May, alleging that the agency's beef checkoff tax, which collected more than $80 million in fiscal 2015, is being unconstitutionally used to promote international beef — to the detriment of U.S. beef products and producers. A judge held the first court hearing on the case on Oct. 25.

R-CALF USA said while its members must pay a $1-per-head tax to the checkoff program, funds from that tax are used to convince consumers that beef from R-CALF USA members' cattle — which are raised domestically and in compliance with U.S. standards concerning safety, treatment and quality — is no different from beef produced abroad.

In the first court hearing in the case, the U.S. District Court for the District of Montana considered USDA's motion to dismiss the case as well as R-CALF USA's motions for summary judgment and a temporary restraining order.

R-CALF USA chief executive officer Bill Bullard said he expects the judge to issue a decision “relatively quickly.” Overall, he said there is a “good possibility of a favorable outcome” for R-CALF’s case defending state beef councils’ collection of checkoff funds.

In its August motion, USDA argued that the subsidy was no longer compelled because the agency is currently promulgating a new rule that would allow producers in most states to petition their respective state beef councils to redirect checkoff dollars away from those private state councils and instead to the federal beef checkoff program, which is operated under the direct supervision of USDA.

Citing the proposed rule, the government moved to either dismiss or to stay the case, saying it believes the disputed tax distribution will be resolved through its rule-making process.

Bullard said the judge asked very pointed questions and clearly indicated that he understood the First Amendment implications. The changes to require state beef councils to acquire or to obtain affirmative consent of producers before taking money and funneling it through to a private entity also was well presented.

Bullard said the best-case scenario for R-CALF USA would be if the court agrees that the process USDA is following to implement state beef checkoffs is unconstitutional and compels producers to fund speech they do not agree with. If this is the decision reached, the court could call for a cease and desist from collecting money.

He said this would not require a full-scale overhaul of the national checkoff, since the Supreme Court has decided that is allowed government speech.

The court has acted in an expeditious manner, with pleadings filed just two weeks before the hearing. Bullard said based on the history of the case, he expects a decision at any time.

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