U.S. Supreme Court ends Beef Checkoff challenge

Jan Shepel
Correspondent
Bill Bullard, R-CALF’s CEO, said he was obviously disappointed that the group's effort to force even more needed reforms upon the beef checkoff program has ended following the U.S. Supreme Court's decision to deny a petition to review a case on the mandatory U.S. beef checkoff.

Last month, the U.S. Supreme Court denied a petition to review a case on the mandatory U.S. beef checkoff, which allows a lower court ruling to stand and brings to an end a years-long challenge of the federal beef promotion program.

The case was brought by the Montana-based cattle producers group called R-CALF USA. The group had asked the high court to rule on whether “unconstitutionally compelled subsidies of private speech” – which they contend the checkoff is – are really “government speech” that is free from protections offered by the First Amendment.

The group, whose acronym stands for Ranchers Cattlemen Action Legal Fund, United Stockgrowers of America, had filed their petition for review by the Supreme Court in December 2021, challenging the way the federal Beef Checkoff is implemented. Their position has been that checkoff dollars are used to subsidize “speech” like advertising and promotion programs, by third-party groups that have the effect of supporting the consolidation of the cattle and beef industry. The group has objected to that for years, saying continued consolidation hurts independent cattle producers.

The suit began in May 2016 when R-CALF sued USDA, arguing that the federal Beef Checkoff of $1 per head, per sale of beef cattle amounts to a “government compelled subsidy of private speech” and that as such it was unconstitutional. The U.S. District Court for the District of Montana granted a preliminary injunction.

After that ruling, for four years, Montana ranchers were required to sign consent forms to the Montana Beef Council to use half of the checkoff dollars to promote beef. Later, R-CALF expanded the lawsuit to include 14 other states.

The USDA then entered into Memoranda of Understanding with 20 state beef councils -- including Wisconsin. After that, a judge ruled that by entering into the MOUs, the state beef councils gave USDA significant discretion to approve or reject any and all promotional activities. Under those MOUs, state beef councils agreed to submit to USDA for pre-approval all promotion, advertising, information and research plans.

In January 2020, the U.S. District Court of Montana ruled in favor of USDA and the Montana Beef Council in the case known as R-CALF vs. Sonny Perdue and USDA. The group and its lawyers took the case to the Court of Appeals.

In July 2021, the Ninth Circuit Court of Appeals upheld that District Court ruling in favor of USDA, saying that the “speech” generated by the third parties for beef promotion was “government speech” and therefore exempt from First Amendment protections. The Appeals Court said that state beef council promotions are ultimately under USDA’s authority, even when third parties develop programs without approval from the agency.

The cattlemen’s group then sought review by the Supreme Court, arguing that in general those MOUs with the state beef councils did not cure the constitutional violations in the programs funded by the beef checkoff. Now that the Supreme Court has declined to hear the case, that Appeals Court decision is upheld.

In a statement, Bill Bullard, R-CALF’s CEO, said he was “obviously disappointed that our effort to force even more needed reforms upon the Beef Checkoff Program has ended,” but added that he was “grateful for the important reforms we did achieve for U.S. cattle producers.”

Checkoff created in 1985

In its ruling, the high court said there was not enough evidence to prove R-CALF’s claim, saying that the checkoff is being run by USDA in the manner it was intended. Congress created the checkoff in 1985. The checkoff became mandatory when 79% of U.S. cattle producers voted for it in a 1988 referendum.

The checkoff raises about $80 million a year, and has raised billions of dollars since its inception – creating funds to create promotion programs like the “Beef. It’s what’s for dinner” advertising campaign.

Since the creation of the checkoff program, the USDA and the Cattlemen’s Beef Board (CBB) have overseen the collection and spending of the checkoff funds. The CBB includes 101 members, including domestic beef, dairy and veal producers along with importers of beef and beef products. Members are nominated by their groups and appointed by the Secretary of Agriculture to serve three-year terms. They are not paid to serve on the board.

“Our objective in this case was to bring an end to the corrupt manner in which the Beef Checkoff Program was being operated,” Bullard said. “Specifically we set out to stop the USDA from unconstitutionally compelling U.S. cattle producers to fund the private speech of private state beef councils.”

Bullard said that because of steps the USDA took, early in the legal fight, they largely succeeded in that effort. “In response to our lawsuit, the USDA took steps to assume necessary control over the speech of the state beef councils identified in our case to limit their ability to express private messages with the money that cattle producers are mandated to pay into the program,” he added.

During the course of the legal process, the District Court awarded R-CALF $150,000 in legal fees and stated that “USDA should have known that the program that R-CALF challenged was unconstitutional...”

Bullard also claimed victory in the sense that USDA also promulgated rules that allow cattle producers to opt out of funding the activities of their state beef council.

Second lawsuit filed

In September 2020, R-CALF filed a new lawsuit over the USDA’s amendments to the operation of the federal Beef Checkoff Program. That suit was filed in the U.S. District Court for the District of Columbia with help from attorney David Muraskin, litigation director at the Public Justice Food Project.

This second lawsuit brought by R-CALF is working its way through the courts. It also targets the Beef Checkof and claims USDA has violated the Administrative Procedures Act by not conducting formal rulemaking processes before entering into agreements with state beef councils to assume control over the messaging of those councils.

The National Cattlemen’s Beef Association (NCBA) has defended the checkoff and the role of state beef councils since the beginning of the original R-CALF lawsuit. In a statement, it said it agreed with the high court’s decision not to hear the case.

Collin Woodall

“For too long we have allowed R-CALF and their attorneys to divide our industry and draw attention away from the important job of beef promotion and research,” said Colin Woodall, CEO of NCBA. “The Supreme Court’s rejection of R-CALF’s petition confirms the Beef Checkoff, and its overseers, are adhering to the letter and spirit of the laws that protect and guide producer investments in the program.”

The NCBA has defended the checkoff and its operation in court. Woodall said that the ruling wasn’t a surprise, adding that the “whole lawsuit process has been nothing but a politically motivated effort by R-CALF to once again try to disparage the checkoff and NCBA.” He said that oversight is robust and the checkoff dollars are being used the way they were intended to be used.