WASHINGTON, Sept. 21, 2016 - A proposed rule that sounds like a simple formalization of an informal policy has ag law experts scratching their well-educated heads.

In July, USDA’s Agricultural Marketing Service (AMS) published a proposed rule dealing with shifting checkoff funds from the state to the national level. In short, the proposed rule would allow for producers to “redirect” their checkoff assessments from state checkoff groups to their national counterparts.

But only in certain states, and only with the soybean and beef checkoffs.

The proposed rule went a little under the radar – it received only 14 comments during a comment period that closed last week.

One observer claims the rulemaking is an effort to avoid further litigation. Bill Bullard, the CEO of the Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America (R-CALF USA), told Agri-Pulse that the proposed rule is a “direct response” to a lawsuit filed earlier this year by his organization.

“It’s an attempt by the government to resolve what they know to be a constitutional violation, but they fall well short,” Bullard said. In response to the lawsuit, Bullard said USDA asked for additional time to respond, saying they were working on a proposed rule “that they said would address all or some of our concerns.”

The lawsuit involved a First Amendment challenge over the administration of the beef checkoff in Montana. There, the Montana Beef Council partnered with Wendy’s to promote hamburgers with “North American beef,” much to the frustration of R-CALF USA, a strong proponent of country-of-origin labeling which can be used to promote “U.S. beef.”

Frustrated Montana beef producers might want to take part in just the kind of redirection USDA is proposing. But those that have followed the process closely are a little confused by USDA’s approach, saying it leaves several questions unanswered.

The proposed rule would allow for producers to request their soybean and/or beef checkoff money – $1 for each animal sold, in the case of beef – be redirected so as to only be allocated to the national checkoff body. But the state where the producer lives must have laws on the books allowing for such a redirection.

That policy was originally included in the language that created the beef and soybean checkoffs, according to Wayne Watkinson, a major player in authoring the checkoff language. Watkinson, who is a lawyer with the McLeod, Watkinson, and Miller law firm in Washington, told Agri-Pulse the provision was removed administratively about a decade ago, and few outside of USDA seemed to know it happened.

“USDA decided that it wanted to delete all the provisions they felt were obsolete because a referendum had been held,” he said, adding that he was surprised when he found out the language had been removed.

Harrison Pittman, the director of the National Agricultural Law Center in Arkansas, was looking through the proposed rule and several things caught his eye. For starters, he said AMS listed several states that would allow the redirection, particularly in Arkansas, despite evidence to the contrary.

“I just thought ‘Wow, that’s going to be news to everyone around here,’” he said in an interview with Agri-Pulse. He went down the list and came across a number of other states that were listed but might not allow for the redirection. He says he thinks that, based on recent action taken by state legislatures, AMS may be using an outdated list, but still expressed confusion as to why potentially inaccurate information was accompanying the proposed rule. 

As currently written, the proposed rule would require producers seeking to redirect their checkoff funds to do so at each time of sale. In their comments on the rule, the U.S. Cattlemen’s Association pointed out the impracticality of that suggestion, saying that beef producers may sell cattle several times each year.

There’s also the question of why AMS would go through the process. Pittman says people in the industry have told him redirection is already happening on an informal basis. So why not just continue to allow it without formalizing government language?

By AMS’ own estimates, only 20 beef producers and 10 soybean producers are expected to redirect their assessment, so the government might be going through formal rulemaking for the sake of 30 producers. Bullard balked at that figure, saying R-CALF USA has thousands of members, many of whom would consider redirecting.

A spokesman for AMS told Agri-Pulse that the agency plans to issue a final rule “following review of the comments,” but didn’t offer a specific timetable on how long that review would take.


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